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RBI Directs SFBs on Electronic Banking Transaction Liability

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📄 Source: Reserve Bank of India · official publication, rbi.org.in
Quick answerRBI issues revised instructions on limiting customer liability in unauthorized electronic banking transactions for Small Finance Banks.

What changed

RBI has revised definitions for Card Not Present, Card Present, Electronic Banking Transaction, and Fraudulent Electronic Banking Transaction in the Reserve Bank of India (Small Finance Banks – Responsible Business Conduct) Directions, 2025.

What it means for you

These changes aim to clarify customer and bank responsibilities in cases of unauthorized electronic banking transactions, ensuring timely action and minimizing losses.

The rule, in the simplest words
  • Small Finance Banks (SFBs) must protect customers if money is stolen from their account through fake online transactions (like buying something without a card).
  • Banks must send an alert (like a text message) for every online transaction so customers know right away.
  • Customers can report a stolen card or fake transaction anytime, day or night, and the bank must act fast.
  • If a customer gives their password or OTP (secret code) to someone else by mistake, the bank may not have to pay back the money.
How it plays out — a real example

A gold-loan officer in Indore gets a call from a customer at 2 AM saying someone used their debit card for a ₹50,000 online purchase. The officer immediately logs into the bank's system, blocks the card, and starts the fraud report—because the new rules say the bank must have a 24x7 reporting channel and act quickly to limit the customer's loss.

What you must do

Who it affects

Small Finance Banks, Customers of Small Finance Banks

What is the effective date of these revised instructions?

These revised instructions will apply to electronic banking transactions undertaken by customers of a bank on or after January 1, 2027.

What is the definition of a Card Not Present transaction?

A Card Not Present transaction has the same meaning as given in the Reserve Bank of India (Authentication Mechanisms for Digital Payment Transactions) Directions, 2025.

Test yourself

Quick self-check built only from the facts already on this page — tap a question to reveal the answer.

Q1. In one line, what does this circular do?

RBI issues revised instructions on limiting customer liability in unauthorized electronic banking transactions for Small Finance Banks.

Q2. Who does this circular apply to?

Small Finance Banks, Customers of Small Finance Banks

Q3. What is the first thing you should do about it?

Review and update internal systems and procedures to ensure safety and security of electronic banking transactions.

💬 Banker Discussion

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Who does what — compliance checklist
💻 IT / Systems
  • Review and update internal systems and procedures to ensure safety and security of electronic banking transactions.
📜 Compliance
  • Implement mandatory alerts for electronic banking transactions.
  • Provide 24x7 channels for reporting of fraudulent electronic banking transactions or loss of debit/credit cards.
  • Act diligently upon customer notifications regarding unauthorized electronic banking transactions or loss of debit/credit cards.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template

Example: if you are an IT/Systems lead at a bank this circular applies to (Small Finance Banks, Customers of Small Finance Banks), your first concrete step on “RBI Directs SFBs on Electronic Banking Transaction Liability” is: “Review and update internal systems and procedures to ensure safety and security of electronic banking transactions.”.

  1. Circular: https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=13544&Mode=0 -- RBI Directs SFBs on Electronic Banking Transaction Liability
  2. Issued: 07 Jul 2026, 04:26 IST
  3. Action required: Review and update internal systems and procedures to ensure safety and security of electronic banking transactions.
  4. Action required: Implement mandatory alerts for electronic banking transactions.
  5. Action required: Provide 24x7 channels for reporting of fraudulent electronic banking transactions or loss of debit/credit cards.
  6. Action required: Act diligently upon customer notifications regarding unauthorized electronic banking transactions or loss of debit/credit cards.
  7. Owner: ____________ Target date: ____________
  8. Board/committee approval needed? Y / N
  9. Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
AI-drafted · 1-model AI consensus fact-check · under the editorial review of our expert review panel · decoded & published by BankPulse · 07 Jul 2026, 04:26 IST
Official RBI source: https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=13544&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert review panel. Independent platform, not affiliated with the Reserve Bank of India; never reproduces RBI text verbatim.
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