RBI mandates banks to prove liability in unauthorised electronic banking transactions
Data scientists. Male programmer using laptop analyzing and developing in various information on futuristic virtual interface screen. Algorithm. marketing and deep learning of artificial intelligence istock photo for BL | Photo Credit: iStockphoto
To protect customers from financial losses on account of unauthorised electronic banking transactions (EBTs), the Reserve Bank of India may ask banks to mandatorily send instant SMS alerts for all electronic banking transactions of above ₹500 and compensate for small value (up to ₹50,000) fraudulent EBTs.
Further, the burden of proving customer liability in complaints involving fraudulent EBTs will lie with the bank, per Draft Reserve Bank of India (Commercial Banks – Responsible Business Conduct) Third Amendment Directions, 2026.
The rules under the Amendment, which will be effective from July 1, 2026, mandate that banks implement robust fraud detection systems and provide instant, mandatory alerts for transactions exceeding ₹500.
A customer will be entitled to zero liability and reversal of the transaction in cases where the fraudulent EBT occurs due to negligence / deficiency on the part of the bank (irrespective of whether the transaction is reported by the customer or not).
Third-party breach
The aforementioned clause will also be applicable in cases of third-party breach where the customer reports the unauthorised fraudulent EBT to the bank within five calendar days from the date of its occurrence.
In cases of third-party breach reported to the bank after five calendar days, the customer shall be compensated, in eligible cases, for his / her loss.
Loss arising from any unauthorised transaction occurring after the reporting of the fraudulent electronic banking transaction by a customer to a bank shall be borne by the bank.
A bank has to ensure that complaints involving fraudulent electronic banking transactions are examined, liability therein is established and response, as applicable, is issued to the customer within 30 calendar days from the date of receipt of the complaint.
A bona fide victim, being an individual person and having lodged a complaint involving gross loss of an amount up to ₹50,000 on account of fraudulent EBT(s) shall be compensated 85 per cent of the net loss amount (calculated after reducing recoveries made, whether before or after paying the compensation, from the gross loss amount), or ₹25,000, whichever is less, once during his / her lifetime.
Published on March 6, 2026
aniltikotekar4sme.com 