meta_id 3266720

The Reserve Bank of India (RBI) has issued the Reserve Bank of India (Commercial Banks - Responsible Business Conduct) Third Amendment Directions, 2026. The amended directions contain: New definitions for key terms including "Card Not Present transaction", "Card Present transaction", "Electronic banking transaction (EBT)", "Fraudulent EBT", "Shadow reversal", "Third-party breach", "Unauthorised EBT", and the specific actions constituting negligence by a customer or a commercial bank. Regulations prescribing customer protection policies for fraudulent EBTs, stipulating that a customer has zero liability and is entitled to a transaction reversal if the fraud is due to the bank's negligence or if a third-party breach is reported within five calendar days. Specific rules mandating banks to send instant SMS alerts for all EBTs exceeding INR 500 (US$5.28), provide 24x7 reporting channels, and ensure complaints are processed and liability is established within 45 days for domestic frauds and 60 days for cross-border frauds. Provisions outlining a compensation mechanism for small value fraudulent EBTs up to INR 50,000 (US$528.15) caused by customer negligence, entitling a bona fide victim to 85 percent of the net loss or INR 25,000 (US$264.08) (whichever is less) once in their lifetime, provided it is reported within five days. Administrative measures detailing the cost-sharing ratio for this compensation such as the RBI bearing 65 percent, the customer's bank 10 percent, and the beneficiary bank 10 percent for losses under INR 29,412 (US$310.68), and establishing a quarterly reimbursement claim process with the RBI. Directives requiring banks to establish a monitoring mechanism for periodic reporting of fraudulent EBT complaints to the Board or its designated committee, and prohibiting the levying of charges on customers for mandatory SMS alerts. The amendments take effect on January 1, 2027.