Online Banking Fraud: What Security Is Available To Affected Customers?

Amid rising instances of digital fraud, especially banking-related online fraud, customers need to be vigilant to avoid falling prey and, in case a fraud occurs, need to take certain steps. When Parliamentarian Sangeeta Yadav asked about the security framework and recovery provisions for citizens affected by electronic banking frauds, Minister of State for Finance Pankaj Chaudhary, in a written reply, outlined the approach that customers need to follow. 

Mandatory Security Measures

The minister highlighted that the Reserve Bank of India (RBI) has guidelines in place that mandate all banks to implement rigorous alert systems. Banks are now required to register customers for SMS alerts and, where possible, along with email notifications for every digital transaction. 

Banks must provide customers with 24x7 access through various channels, including phone banking, toll-free helplines, IVR, and SMS, to report unauthorised transactions. Further, banks have also been instructed to provide a direct link on their websites to lodge complaints regarding unauthorised electronic or digital transactions.

Relief On Small Value Transactions

The RBI has also introduced a revised framework for small value fraudulent electronic banking transactions. Under these revised rules, a customer can access a one-time reimbursement facility and get compensation of up to 85 per cent of the net loss of Rs 25,000, whichever is lower. This initiative is aimed at providing quick financial relief to customers and maintaining their confidence in the system.

 For higher amounts and broader fraud cases, the RBI’s July 2017 circular continues to apply, which limits customer liability if they inform the bank about the fraud within a stipulated time. According to the circular, a customer may qualify for Zero Liability or limited liability, as per the bank’s board-approved policies. Banks are mandated to resolve such complaints and fix liability within 90 days.   

However, if the bank doesn’t reimburse, or the liability is not fixed within the stipulated turnaround time (TAT), the customer can escalate the matter.

Escalation Matrix

Under the Reserve Bank – Integrated Ombudsman Scheme, 2026, a customer can approach the RBI Ombudsman if the bank doesn’t reply within 30 days, or the resolution is not satisfactory. 

Customers can further escalate the matter if the resolution provided by the RBI Ombudsman is not satisfactory by appealing against it to the Appellate Authority within 30 days. For an entity not covered under the Integrated Ombudsman Scheme, the Consumer Education and Protection Cell of the RBI handles complaints related to them.

National Cybercrime Support

The minister highlighted that the government has integrated the national resources to secure against cyber-enabled banking frauds and other financial crimes. There is a dedicated toll-free helpline number 1930 and a National Cybercrime Reporting Portal, where customers can report such incidents.

According to data presented by Chaudhary, the total number of reported banking frauds in financial year 2025-26 stood at 5,997 involving Rs 35.86 crore, compared to 293,239 frauds involving Rs 2,060.75 crore in FY 2023-24 and 144,855 frauds involving Rs 821.88 crore in FY 2024-25. However, this reduction in fraud numbers is not the actual reduction. 

Chaudhary said in his reply that this change reflects the updated reporting directions (Master Directions on Fraud Risk Management) issued in July 2024, and focuses on frauds committed specifically on banks, while all other disputed transactions are tracked by the Central Payments Fraud Information Registry (CPFIR) of the RBI.