RBI Mandates Automatic Refunds and ₹100 Daily Compensation for Failed UPI Transactions

The Reserve Bank of India (RBI) has established a framework for turnaround time and customer compensation concerning failed digital transactions, specifically addressing instances where UPI payments are debited but not successfully completed. These rules aim to protect ordinary savers and taxpayers by setting clear deadlines for banks to reverse such transactions.

Under this framework, if a person-to-person (P2P) UPI fund transfer fails, with the sender's account debited but the beneficiary's account not credited, the amount must be automatically reversed within T+1 day, where T is the transaction date. For merchant payments, where the account is debited but the merchant does not receive confirmation, the auto-reversal timeline is T+5 days. A glitch in any part of the transaction chain—sender's bank, beneficiary's bank, NPCI's network, or the app—can cause these failures.

Crucially, if a bank misses the applicable deadline for reversal, the RBI framework prescribes an automatic compensation of ₹100 per day for the delay. Customers are not required to file a separate claim to receive this compensation. If a payment issue arises, users are advised not to send the payment a second time until the status is confirmed. Instead, they should check the transaction status within their UPI app, save the reference number, and raise a dispute using the in-app help option, noting the complaint ticket number.

Should the issue remain unresolved via the app, a formal complaint can be lodged with the sender's bank, sharing transaction details and the app's complaint reference. Further escalation is possible through NPCI’s Register a Complaint portal, which routes the matter to the relevant institution. If the bank's response is unsatisfactory, or if there is no reply within the set period, affected individuals can approach the RBI’s Complaint Management System under the Integrated Ombudsman framework, which came into effect on July 1, 2026. Users should retain all transaction details and be wary of scammers exploiting the urgency of failed payments, never sharing UPI PINs, OTPs, or other credentials.

What to watch: Adherence of banks to these auto-reversal and compensation timelines.

Editor's note: The draft accurately synthesizes the RBI framework for UPI failed transactions and the corresponding escalation procedures.