Banks and financial institutions are required to complete several customer-service requests within timelines prescribed by the Reserve Bank of India (RBI). If a bank fails to meet these deadlines, customers may be entitled to compensation for every day of delay, depending on the applicable RBI rules.
These compensation provisions cover a range of services, including closure, failed digital transactions, return of property documents after loan repayment and correction of credit-report inaccuracies.
The compensation can range from ₹100 per day to ₹5,000 per day in certain cases.
RBI’s framework for customer compensation is largely deadline-driven. It specifies a turnaround time (TAT) for a particular service and, if the bank exceeds that period, compensation may become payable under the relevant rules.
1. Failed digital payments
Customers may be eligible for compensation when a digital transaction or ATM transaction fails but their account is debited.
For certain failed transactions, including some UPI, ATM, and card transactions, banks are required to resolve the issue within the applicable RBI-prescribed turnaround time. Where compensation is applicable, the bank must generally provide ₹100 for each day of delay beyond the prescribed timeline, without requiring the customer to separately claim it.
The applicable timeline and compensation, however, depend on the type of transaction and the RBI framework governing it.
2. Credit card closure delay
Credit card holders are also protected by a specific RBI turnaround time.
Banks and card issuers are required to close a credit card account within seven working days of receiving a closure request, subject to the applicable conditions. If the issuer fails to close the account within the prescribed period, it is liable to pay ₹500 per calendar day of delay to the cardholder until the account is closed.
This provision can become significant when a card issuer continues to keep an account open despite the customer having formally requested closure.
3. Delay in returning property documents after loan repayment
Home loan borrowers also have protection when it comes to their original .
Once a borrower has fully repaid or settled a loan, the bank or lender is required to return the original property documents within 30 days.
Under RBI guidelines issued on September 13, 2023, if the delay is attributable to the lender, the borrower is entitled to compensation of ₹5,000 for every day of delay.
The rules also address situations where original property documents are lost or damaged while in the lender’s custody.
In such cases, the lender must help the borrower obtain duplicate or certified copies of the documents and bear the associated costs.
The borrower is also entitled to compensation as prescribed under the RBI framework.
4. Delay in correcting credit-report errors
Errors in a credit report can affect a consumer’s ability to obtain loans or credit cards. RBI rules provide compensation when complaints relating to credit-information correction are not resolved within the prescribed timeline.
Where the applicable 30-day period is exceeded, the customer can be entitled to compensation of ₹100 per calendar day of delay until the complaint is resolved, subject to the applicable RBI framework.
Consumers should therefore retain records of their complaint, including the date on which they raised the dispute and any communication received from the bank or credit institution.
5. Loss of contents in a bank locker
RBI rules also specify the bank’s liability when locker contents are lost or damaged in circumstances covered by the guidelines, including certain cases involving negligence, fire, theft or fraud.
The bank’s liability is capped at 100 times the annual locker rent.
For example, if a customer pays an annual locker rent of ₹3,000, the maximum liability under this framework would be ₹3 lakh.