MUMBAI, Feb 6, 2026 — In a landmark decision today, RBI Governor Sanjay Malhotra fundamentally changed the rules of digital banking in India. For the first time ever, the Reserve Bank of India (RBI) has introduced a mandatory compensation framework for victims of small-value digital frauds.
Consequently, if you lose money to a scammer, you no longer have to fight a losing battle with your bank for a refund. Here is everything you need to know about this game-changing policy.
Why the RBI Is Stepping In Now
In the past, banks typically rejected refund claims if a customer “voluntarily” shared an OTP or clicked a fraudulent link. They labeled it “gross negligence.” However, the central bank now acknowledges that cybercriminals use AI-driven tactics that can deceive even the most cautious users.
Furthermore, statistics show that nearly 65% of all digital frauds in India are “nuisance scams” involving amounts under ₹50,000. Because these small losses often go unreported, the RBI decided to build a “Digital Safety Net” to maintain public trust in the UPI and banking ecosystem.
The ₹25,000 Refund: How the Math Works
The new policy follows a “Shared Responsibility” model. Therefore, while you get your money back, the system ensures that both banks and customers remain alert.
1. The 85% Payout Formula
Under the 2026 guidelines, the RBI covers 85% of your stolen amount, subject to a maximum cap of ₹25,000.
- If you lose ₹10,000: You receive a ₹8,500 refund.
- If you lose ₹20,000: You receive a ₹17,000 refund.
- If you lose ₹50,000: You receive the maximum ₹25,000 refund.
2. Who Pays for the Scam?
To force banks to upgrade their security, the financial burden is split:
- The RBI (DEA Fund): Provides the bulk of the compensation.
- The Bank: Must contribute 15% of the claim amount. As a result, banks are now incentivized to block suspicious accounts faster.
- The Customer: Absorbs a 15% loss (or the amount above the cap). This ensures that users do not become reckless with their security.
The “One-Time” Catch
It is important to note that this is a once-in-a-lifetime benefit. Specifically, the RBI designed this as a “Learning Payout.” If you are defrauded a second time, you will not qualify for the “No Questions Asked” refund. Instead, your case will undergo the standard, lengthy legal investigation. Essentially, the RBI is willing to pay for your first mistake, but not your second.
How to Claim Your 25000 from RBI (Step-by-Step)
If you fall victim to a scam, you must act immediately to stay eligible for the payout. Follow these steps:
- The 2-Hour Window: Report the transaction to your bank’s emergency fraud line within two hours.
- National Helpline: Immediately call 1930 or log onto
cybercrime.gov.in. You must have an official Acknowledgement Number to file your claim. - Submit the Claim: Use your bank’s mobile app or visit the branch. Specifically, ask for the “2026 Small-Value Fraud Compensation Form.”
- Instant Credit: Once the bank verifies this is your first claim, they must credit the amount to your account within 10 working days.
Additional 2026 Banking Protection Rules
The refund policy wasn’t the only update from today’s MPC meeting. In addition to the compensation, the RBI introduced:
- The 4-Hour “Cooling Period”: When you add a new payee on UPI or Net Banking, the first transaction will be delayed by four hours. This gives you time to “Stop Payment” if you realize it was a scam.
- Senior Citizen “Hard Lock”: Banks will now provide an optional feature for elderly users that requires a secondary approval from a trusted nominee for any transaction over ₹10,000.
- Strict Recovery Hours: Following multiple complaints, the RBI has banned recovery agents from calling customers between 9 PM and 8 AM.
The RBI’s new stance is clear: Digital safety is no longer just the customer’s problem. While the ₹25,000 refund offers a massive sigh of relief for millions, staying informed is still your best defense.
Rajil M P is a seasoned banking professional with over eight years of experience in the Indian banking sector. He has successfully completed the JAIIB and CAIIB examinations conducted by the Indian Institute of Banking & Finance (IIBF), reflecting his strong academic foundation and practical expertise in banking, finance, and risk management. He is the founder and editor of IndianBanker.com, a trusted platform focused on banking news, exam preparation, financial updates, and practical tools for banking aspirants, professionals, and informed readers. Drawing from real-world banking experience, Rajil simplifies complex topics such as interest rates, loans, deposits, RBI policies, and government schemes, making them easy to understand and apply.
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