The Reserve Bank of India (RBI) on Friday proposed that customers will face zero liability if fraudulent digital banking transactions occur due to negligence by lenders.Under draft guidelines issued as part of the ‘Review of Framework of Limiting Customer Liability in Digital Transactions’, lenders would be required to reverse unauthorised transactions if the fraud is linked to lapses on their part.The proposed norms will apply to electronic banking transactions conducted on or after July 1, 2026, once the framework is finalised.“A customer shall be entitled to zero liability and reversal of the transaction in cases where the fraudulent electronic banking transaction occurs due to negligence/deficiency on the part of the bank (irrespective of whether the transaction is reported by the customer or not),” it said in the draft framework.For fraudulent transactions involving up to Rs 50,000, a genuine victim may receive 85% of the net loss or ₹25,000, whichever is lower, as a one-time compensation during their lifetime.Negligence by a bank would include not putting in place the mandated systems and procedures to ensure safety and security of electronic banking transactions, not sending mandatory alerts for electronic banking transactions, and system malfunctions or security breaches or internal frauds leading to unauthorised banking transactions.In cases involving third-party breaches, where the customer reports the unauthorised fraudulent electronic transaction within five calendar days of its occurrence, lenders will bear the full responsibility and reverse the transactions, as per the norms.Story continues below this adThird-party breach refers to a situation where the failure lies elsewhere in the system, including deficiency on the part of intermediaries such as a Third-Party Application Provider (TPAP), Payment Aggregator (PA), Payment Gateway (PG), and Telecom Service Provider (TSP).“A bona fide victim, being an individual person and having lodged a complaint involving gross loss of an amount up to Rs 50,000 on account of fraudulent electronic banking transactions, shall be compensated 85% of the net loss amount (calculated after reducing recoveries made, whether before or after paying the compensation, from the gross loss amount), or Rs 25,000, whichever is less, once during his/her lifetime,” the norms said.However, compensation would only be granted if loss is proven to be bona fide, as per the banks policy, and the victim has reported the fraudulent transactions to the National Cyber Crime Reporting Portal or National Cyber Crime helpline (1930), as well as to the bank within five days.For a complaint related to fraudulent electronic banking transactions involving a loss amount of less than Rs 29,412, where a compensation of 85% is paid, 65% shall be borne by the RBI, 10% by the customer’s bank and the remaining 10% by the beneficiary bank, the central bank said. For a complaint related to fraudulent electronic banking transactions involving a loss amount of Rs 29,412 or more but up to Rs 50,000, where a compensation of Rs 25,000 is paid, the RBI, the customer’s bank and the beneficiary bank shall contribute Rs 19,118, Rs 2,941 and Rs 2,941 respectively towards the compensation.Story continues below this ad“In cases where the fraudulent electronic banking transaction occurs due to negligence by the customer, he/she shall be liable for the loss incurred by him/her, to the extent of loss not eligible for compensation, until he/she reports the fraudulent electronic banking transaction to the bank,” the framework suggested.The RBI said the burden of proving customer liability in complaints involving fraudulent electronic banking transactions shall lie on the lender. If a complaint is rejected, a bank must disclose the reason for it, along with supporting details such as OTP logs, SMS logs, and transaction logs, among others to the customer.Additionally, a lender will bear responsibility for loss arising from unauthorised transactions that occur after a customer reports the fraudulent transaction to it, the draft norms stated.The RBI proposed that when a lender is required to reverse a fraudulent transaction, it shall ensure the reversal is value dated to the original date of occurrence, ensuring the customer does not lose interest or incur additional charges.