What changed
RBI issued the Reserve Bank of India (Regional Rural Banks - Responsible Business Conduct) Third Amendment Directions, 2026, inserting new definitions for Card Not Present, Card Present, electronic banking transaction, fraudulent EBT, customer negligence, RRB negligence, shadow reversal, third-party breach, and unauthorised EBT. The revised instructions apply to transactions on or after January 1, 2027.
What it means for you
RRBs must now align their fraud detection, alert systems, and customer grievance processes with these clarified definitions. The explicit list of customer and bank negligence actions will directly determine liability in unauthorised transaction disputes. Shadow reversal (provisional credit) is formally recognised, requiring RRBs to have clear procedures for temporary credits during investigations.
What you must do
- Update internal policies and system logic to incorporate the new definitions of fraudulent EBT, customer negligence, and RRB negligence.
- Ensure 24x7 channels for reporting fraudulent EBTs or lost cards are operational and well-publicised.
- Review and strengthen mandatory alert mechanisms for all electronic banking transactions.
- Train customer-facing staff on the revised liability framework and shadow reversal process.
- Prepare for compliance by January 1, 2027, including system changes and customer communication updates.
Who it affects
Regional Rural Banks (RRBs), RRB customers using electronic banking transactions, RRB compliance and risk management teams, Digital payment system providers serving RRBs
What is the effective date for these revised directions?
The directions apply to electronic banking transactions undertaken by RRB customers on or after January 1, 2027.
What does 'shadow reversal' mean in this context?
Shadow reversal means the temporary or provisional credit of the amount involved in fraudulent EBT(s) provided by an RRB to a customer on receipt of notification, before completion of investigation. The customer shall not be allowed to use such amount and will not bear additional interest or charges.
How is customer negligence defined under the new rules?
Customer negligence includes failing to safeguard credentials, not promptly reporting fraud or loss of debit/credit card, ignoring clear bank warnings, downloading malicious apps, or not updating registered mobile number/email address with the RRB.