Financial Fraud: RBI Guidelines For Unauthorised Transactions

Posted On : July 7, 2022
Financial Fraud: RBI Guidelines For Unauthorised Transactions
Online banking is an inevitable mode of payments in this world of advanced technology. With the advancement of Artificial Technology, human efforts are reducing granting more and more convenience to people. However, such technological convenience holds huge risks as well for the customers. Know in detail what the RBI guidelines for unauthorised transactions lay in favour of bank users.
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Online banking is an inevitable mode of payment in this world of advanced technology. With the advancement of Artificial Technology, human efforts are reduced, granting more and more convenience to people. However, such technological convenience holds huge risks as well for the customers. Know in detail what the RBI guidelines for unauthorised transactions lay in favour of bank users.

While mobile phones have replaced many other gadgets, it has also become a wallet lately. Using online modes of payment are quite common these days. Even credit cards, debit cards, etc. need not be carried while people can make payments directly using mobile applications. This also requires app permissions which eventually brings the risk of hackers. There are two sides to every coin, so do online transactions. While a person does not need to carry cash everywhere, money in banks is also not so safe. The threat of unauthorised transactions has only increased recently. The Reserve Bank of India (RBI) being the regulatory authority at the central level constantly keeps an eye on financial safety through RBI guidelines for online transactions. Prioritising limiting the liability of customers, RBI holds banks responsible in case of bank fraud complaints. The basic idea is to provide customers with all the safety means to promote the use of online transactions. 


What Does Unauthorised Transaction on Credit Card Mean?

When you are enjoying your Sunday while staying back at home and preparing for the next day’s run to work, you receive a text message depicting a debit of Rs 1 lakh from your bank account. Suddenly the sky seems to be falling because you are not the one who made any purchase or withdrew any money from your account. No kin is using your credit or debit card with your permission either. This is what you call an unauthorised transaction. Some people stress more assuming that their bank won’t refund unauthorised transactions. It is recommended to know RBI guidelines for online transactions and lodge online FIR for fraudulent transactions without delay. 


Can Banks Refund Unauthorised Transactions?

Earlier, the laws in India did not include limiting the liability of customers in case of financial fraud. However, an unprecedented hike in unauthorised transaction complaint and financial frauds have come to light in recent years. To address the same, RBI guidelines for unauthorised transactions keep revising from time to time. The latest RBI guidelines for UPI frauds in banks, unauthorised transactions on credit card and debit cards, and other online modes require banks to refund the amount. For that purpose, an unauthorised transaction complaint has to be reported without delay. While availing electronic payment services, banks have been instructed to register the customer’s contact number (email ID as well) so that each and every transaction alert is communicated to that number. In that case, it is easy for customers to notice and report unauthorised transaction complaints and refunds can be initiated accordingly. 

However, delays in reporting and also participation in the commitment of online financial frauds may affect the limiting liability of customers as per RBI. Once the matter is proven to fall under an unauthorised transaction complaint, banks have to process the refund within 10 days. The complaint also needs to be resolved within 90 days as per RBI guidelines for disputed transactions. If the officials comment that the bank won't refund unauthorised transactions since details were disclosed by the customer for which no cyber complaint was lodged, a cyber crimes lawyer may help clear the further path.


Limiting Liability of Customers: RBI on Unauthorised Transactions

RBI guidelines for unauthorised transactions provide limited liability to customers in case of unauthorised transaction complaints. There are some guidelines regarding bank fraud complaints that require customers not to disclose private information like an OTP, CVV, etc., and report the unauthorised transaction on the credit card or any other online mode without delay. If an unauthorised transaction complaint is received within 24 hours and there is no negligence on the part of the customer, a 100% refund is provided. However, if it is the customer’s negligence that resulted in unauthorised transactions, the customer has to bear all loss till the matter is reported to the concerned bank. Once the banker comes to know about bank fraud complaints, any further unauthorised transaction has to be borne by the bank only. Click here for official RBI guidelines in this regard.


RBI Guidelines for Unauthorised Transactions

If neither the bank nor the customer is at fault and a third-party breach led to an unauthorised transaction complaint, the following rule applies for a refund:

  • Within 3 Days - As per RBI guidelines for disputed transactions, if the customer reports bank fraud transactions within 3 days, he/ she will have to bear zero liability. The whole amount will be refunded to the account by the concerned bank. 
  • Within 4-7 Days - Limiting liability of customers, RBI guidelines require customers to bear with the transaction amount or an amount within Rs 5000 up to Rs 25,000, whichever is lower in case the unauthorised transaction complaint is made after 3 days and before 7 days. 
  • After 7 Days - The bank won't refund unauthorised transactions after the expiry of 7 days if the policy does not allow it.


If the customer is at fault for sharing the credentials with an unauthorised person, he/ she will have to bear the losses until reported to the concerned banker. Once the bank fraud complaints are registered with the concerned bank and another unauthorised transaction takes place thereafter, the same has to be borne by the bank as per RBI guidelines for unauthorised transactions. 

Also, if financial fraud takes place due to contributory fraud or negligence of the bank, the customer enjoys zero liability regardless of whether or not the unauthorised transaction complaint is lodged with the bank. Things can be clarified through expert opinion via banking lawyers


Documents Required for Unauthorised Transaction Complaint

  • Bank Account Statement
  • Address Proof of Account Owner 
  • Identity Proof
  • Xerox copies of unauthorised transaction snapshots
  • Online FIR for fraud transaction at Cyber Crime website
  • A written complaint containing complete details of the unauthorised transaction on the credit card or other mode


Process for Bank Frauds Complaints

  • Cyber Complaint - Customers should lodge a cyber complaint within 24 hours if an unauthorised transaction through electronic payments took place from their account. It may be taken as an online FIR for a fraud transaction. There should be no delay in reporting to the bank as well. Keep bank acknowledgment and Cyber Cell complaint number safe for further process. 
  • Bank Frauds Complaints - The RBI guidelines for unauthorised transactions require customers to inform the bank without any delay and obtain an acknowledgment as well. Online FIR for fraudulent transactions is not enough in such cases to ensure a refund by the bank. 
  • Police FIR - If a person loses physical possession of his/ her credit/ debit card and the same has already been used for unauthorised transactions, the cardholder has to report the same to the police. 
  • Complaint to RBI - If you have reported a fraud transaction to the concerned bank within the given time frame and they say that the bank won’t refund an unauthorised transaction, you may register a complaint against the bank with RBI. If your bank is not willing to help with unauthorised fraud transactions, click here to register a complaint with RBI. 


How do I get my Money Back from Unauthorised Transactions?

One should make sure to keep all physical financial items like credit/ debit cards safe so that they do not reach a third party. Also make sure not to disclose important credentials like an OTP, or CVV to others, not even to bank officials. As per the RBI guidelines for unauthorised transactions, it is pertinent for customers to report fraudulent transactions without any delay. It does not matter much whether the bank fraud complaint involves negligence on the part of the customer, as soon as the same is reported to the bank, things are much under control. It is also not necessary that if OTP or other credentials are shared and financial fraud takes place, the customer will surely have to bear the losses since it depends upon the bank policy whether the customer will bear complete liability. 



Q- Can banks refund Unauthorised transactions?

A- Yes, provided there is no negligence on the part of the account holder and such transaction has to be reported to the bank within 24 hours for a 100% refund.


Q- What are the rules for RBI transaction disputes?

A- The bank has 90 days from the date of receipt to settle your complaint. If the transaction occurred due to your negligence, such as disclosing your password, PIN, OTP, and so on, you will be responsible for the loss until you notify your bank.


Q- What is the time frame for Unauthorised transaction?

A- The customer should report about the unauthorized transaction within 3 working days to have zero liability. The bank has to resolve the complaint for an Unauthorized transaction within 90 days from the date of receipt.


Q- What are the rules for customer liability in RBI?

A- The customer's liability based on the time taken to report fraudulent transactions:

  1. Within 3 working days: Zero liability.
  2. Within 4 to 7 working days: Limited liability, capped at the transaction value or the amount specified in this table, whichever is lower.
  3. Beyond 7 working days: Subject to the bank's Board approved policy.



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