**Executive Summary**
On March 06, 2026, the Reserve Bank of India (RBI) issued draft amendment directions to revise the 2017 framework for limiting customer liability in digital transactions. The proposed changes aim to expand the scope of protected fraudulent transactions, accelerate complaint processing, and introduce a compensation mechanism for small-value frauds. Regulated entities and the public are invited to submit feedback on these drafts by the deadline of April 6, 2026.
**Key Points / Main Content**
* **Expansion of Scope and Objectives**
* The draft seeks to update the 2017 instructions to match the current digital payment and banking landscape.
* The scope of limited customer liability will be expanded to cover additional categories of fraudulent electronic banking transactions beyond unauthorized transactions.
* Proposed changes aim to significantly reduce the time banks take to process complaints related to fraudulent electronic transactions.
* **Compensation Mechanism**
* A new compensation mechanism is proposed for small-value fraudulent electronic banking transactions.
* This mechanism will remain in force for one year from the effective date, followed by a review.
* The review intends to increase the share of compensation paid by banks while reducing or eliminating the share contributed by the RBI.
* **Regulatory Amendments**
* The draft proposes amendments to the "Responsible Business Conduct" directions for several bank categories, including:
* Commercial Banks
* Small Finance Banks
* Payments Banks
* Local Area Banks
* Regional Rural Banks
* Urban Co-operative Banks
* Rural Co-operative Banks
**Impact Analysis**
**Regulated Entities (Banks)**
**Impact**
Banks across all categories (Commercial, Cooperative, Rural, etc.) will be subject to revised liability frameworks and stricter timelines for resolving fraud-related complaints. They will also be required to participate in a new compensation mechanism for small-value frauds.
**Action Required**
Regulated entities must review the draft amendment directions and submit their comments or feedback by April 6, 2026, via the RBI’s ‘Connect 2 Regulate’ web section or through the designated email channel.
**Customers and General Public**
**Impact**
Customers will benefit from enhanced protection against a wider range of fraudulent electronic transactions and can expect faster resolution of their complaints and access to a specific compensation mechanism for small-value frauds.
**Action Required**
Members of the public and other stakeholders may submit feedback on the draft amendments by the April 6, 2026, deadline through the RBI website or email.
Key Entities Referenced
Statement on Developmental and Regulatory Policies: The policy document dated February 6, 2026, which serves as the basis for the issuance of the draft amendment directions.
Reserve Bank of India (RBI): The central regulatory authority issuing draft amendment directions to review customer liability frameworks and introduce compensation mechanisms.
Framework of Limiting Customer Liability in Digital Transactions: The policy framework being reviewed and expanded to enhance customer protection against fraudulent electronic banking transactions.
Directions on Responsible Business Conduct: The existing regulatory directions issued to various banking categories that are proposed to be amended by these new drafts.
प्रेस प्रकाशनी PRESS RELEASE
भारतीय ररज़र्व बैंक
RESERVE BANK OF INDIA
वेबसाइट
:
www.rbi.org.in/hindi
संचार वर्भाग, केंद्रीय कायाालय, शहीद भगत ससिंह मागा, फोटा, म िंबई - 400 001
Website : www.rbi.org.in Department of Communication, Central Office, Shahid Bhagat Singh Marg, Fort,
ई-मेल/email : helpdoc@rbi.org.in Mumbai - 400 001 फोन/Phone: 022 - 2266 0502
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.
2. Accordingly, in pursuance of the announcement made in the Statement on
Developmental and Regulatory Policies dated February 6, 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.
(i) Reserve Bank of India (Commercial Banks - Responsible Business Conduct)
Third Amendment Directions, 2026
(ii) Reserve Bank of India (Small Finance Banks - Responsible Business Conduct)
Third Amendment Directions, 2026
(iii) Reserve Bank of India (Payments Banks - Responsible Business Conduct)
Second Amendment Directions, 2026
(iv) Reserve Bank of India (Local Area Banks - Responsible Business Conduct)
Third Amendment Directions, 2026
(v) Reserve Bank of India (Regional Rural Banks - Responsible Business Conduct)
Third Amendment Directions, 2026
(vi) Reserve Bank of India (Urban Co-operative Banks - Responsible Business
Conduct) Third Amendment Directions, 2026
(vii) Reserve Bank of India (Rural Co-operative Banks - Responsible Business
Conduct) Third Amendment Directions, 2026
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:2
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)
Press Release: 2025-2026/2224 Chief General Manager