Unauthorised Transactions: Meaning, RBI Guidelines & How to Report

Digital payments have made banking easier, but they also bring risks like unauthorised transactions. If you’ve ever noticed a suspicious debit on your bank account, credit card, or UPI app, you’re not alone. Fraudsters use phishing, card cloning, and OTP compromise to trick people. Thankfully, the RBI has clear guidelines to protect customers. Let’s break it down.

What is an Unauthorised Transaction?

An unauthorised transaction is a financial transaction carried out without the account holder’s knowledge or consent. It usually happens due to fraud, theft, or error and can occur via credit cards, debit cards, UPI, or internet banking.

Examples of unauthorised transactions:

• A debit card charge without using your card
• A credit card swipe for something you never purchased
• UPI transfers approved without your OTP
• Internet banking transactions triggered by phishing
  

‘Unauthorised Transaction’ in some of the Indian Languages

How to explain ‘Unauthorised Transaction’ to kids?

Imagine someone spends money from your purse without asking. That’s what an unauthorized transaction is, money taken from your bank account, debit card, or credit card without approval or permission. RBI (Reserve Bank of India) says if you tell your bank quickly (within 3 days), you won’t lose money. The faster you act, the safer your money.

RBI Guidelines on Unauthorised Electronic Banking Transactions

The Reserve Bank of India (RBI) issued a 2017 circular to protect customers. These rules clearly define liability between banks and customers.

Liability of Customer vs Bank

• If the fraud happens due to the bank’s negligence (like system failure), you have zero liability.
• If you report the fraud within 3 days, you also have zero liability.
• If reported after 4–7 days, liability is limited (₹5,000–₹25,000 depending on account type).
• If reported after 7 days, liability depends on the bank’s policy.
  

RBI Guidelines for Unauthorised Transactions

Zero Liability Cases

• Bank systems are compromised
• Fraud happens due to card/UPI cloning, not customer error
• Customer reports within 3 working days
  
  

Limited Liability Cases

• Customer delays beyond 3 days but reports within 7 days
• Loss capped as per RBI-defined limits
  
  

How to Report an Unauthorised Transaction in India

Immediate Steps

1. Call your bank’s helpline immediately to block the card/UPI.
2. Send an SMS or email to the bank’s official ID with transaction details.
3. File a written complaint with your bank branch.
   
   

Escalation through RBI Ombudsman / NPCI

• If the bank delays refund beyond 10 working days, escalate to the Banking Ombudsman.
• For UPI-related frauds, complaints can be filed via NPCI portal or your UPI app.
  

How Banks Handle Unauthorised Transactions

Investigation Process

Banks trace transaction logs, merchant IDs, and authentication history (OTP, PIN, biometrics).

Refund Timelines

Most banks (SBI, HDFC, ICICI, Axis) refund within 10 working days once liability is established.

How to Protect Yourself from Unauthorised Transactions

• Enable two-factor authentication on cards and apps
• Never share OTP, CVV, or PIN with anyone
• Use card lock/unlock features in mobile banking apps
• Check SMS/email alerts daily for suspicious activity
• Avoid clicking phishing links or downloading unknown apps
  

FAQs on Unauthorised Transactions

Q1. What is an unauthorised transaction?

Any banking or card transaction done without the account holder’s permission.

Q2. What are RBI guidelines on unauthorised transactions?

RBI provides zero liability if reported within 3 days, and limited liability if reported within 4–7 days.

Q3. How do I report an unauthorised debit/credit card transaction?

Call customer care immediately, block your card, and file a complaint in writing.

Q4. Will the bank refund money lost in unauthorised transactions?

Yes. Refunds are processed within 10 working days if reported promptly as per RBI rules.

Q5. Can unauthorised transactions happen through UPI or net banking?

Yes. Phishing, OTP compromise, and malware are common reasons for UPI and online fraud.