Regulatory Alerts2026-06-24
Reserve Bank of India (Small Finance Banks - Responsible Business Conduct) Third Amendment Directions, 2026
The Reserve Bank of India issued the Third Amendment Directions, 2026, to revise liability limits and protection mechanisms for Small Finance Banks regarding unauthorized electronic banking transactions. The directions establish zero liability for customers in cases of bank negligence or third-party breaches, define specific customer negligence scenarios, and mandate immediate shadow reversals and robust fraud detection systems. Additionally, a one-time compensation scheme covering up to 85 percent of net losses up to ₹50,000 is introduced for bona fide victims, with costs shared between the Reserve Bank, the customer's bank, and the beneficiary bank.
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