The Reserve Bank of India (RBI) issued draft amendment directions on 6 March 2026 to review and strengthen the framework governing limiting customer liability in digital banking transactions. The move follows significant growth and changes in India’s digital payments ecosystem since the original 2017 guidelines. The proposed amendments aim to expand the scope of existing rules to cover additional categories of fraudulent electronic banking transactions, reduce the time taken by banks to process fraud complaints, and introduce a compensation mechanism for small-value fraud cases. The draft amendments apply across multiple regulated entities including commercial banks, small finance banks, payments banks, local area banks, regional rural banks, urban co-operative banks, and rural co-operative banks. The proposed compensation mechanism will operate for one year from the effective date, after which it will be reviewed with a view to increasing banks’ share in compensation and reducing the RBI’s contribution. The RBI has invited comments from stakeholders and the public until 6 April 2026.
Reserve Bank of India
March 06, 2026
RBI Issues Draft Amendment Directions for ‘Review of Framework of Limiting Customer Liability in Digital Transactions’
The digital payment and banking landscape has evolved considerably since issuance of the existing instructions on limiting liability of customers in unauthorised electronic banking transactions in 2017. Upon a review, it has been decided to issue revised instructions on the subject to banks, which shall inter alia enhance the scope of existing instructions on limiting liability of customers in unauthorised electronic banking transactions to cover other categories of fraudulent electronic banking transactions, reduce the time taken by banks to process complaints related to fraudulent electronic banking transactions, and introduce a compensation mechanism for small value fraudulent electronic banking transactions.
Accordingly, in pursuance of the announcement made in the Statement on Developmental and Regulatory Policies dated February 06, 2026 the Reserve Bank of India (RBI) has today issued the following draft Amendment Directions for public comments, which propose to amend existing Directions on Responsible Business Conduct issued by the Department of Regulation, RBI.
3. The compensation mechanism proposed to be introduced under these Amendment Directions will be in force for one year from the effective date of these Directions. This will be reviewed on the basis of the experience gained with an objective of enhancing the share of the banks and reducing / eliminating the share of RBI in the compensation paid to the victims.
4. The comments / feedback on the draft Amendment Directions may be submitted by the regulated entities and members of public / other stakeholders on or before April 6, 2026 through the following channels:
(i) the ‘Connect 2 Regulate’ section on the website by following the corresponding hyperlink provided against each document in the page where they are hosted; or
(ii) by email with the subject line ‘Feedback on (full name of the draft Amendment Directions (including the type of Regulated Entity))’.
(Brij Raj)
Chief General Manager
Press Release: 2025-2026/2224
