Banks Face Limits On Penalties After Fraud Complaints, Rules Delhi HC

A Delhi High Court order issued in the first week of November 2025 stated that banks cannot impose charges after a fraud report Delhi HC ruling came as part of a petition filed over an unauthorised credit-card entry.

Many customers ask why banks continue to add interest, late fees and penalty sums even when they report a fraudulent transaction within the safe timeline. That question led to a turning moment when the Delhi High Court ruled earlier this month that such billing steps violate RBI liability rules.

The petition began with an advocate who denied authorising a payment yet continued to face repeated reminders and charges. The ruling came amid an Economic Times report published on 6 September 2024 that said internet and card fraud incidents recorded under RBI-linked reporting had dropped by almost half in FY25.

This shift restored public attention on how banks are expected to follow the limits set by the RBI circular.

What The Court’s Direction Means Under RBI Guidelines?

The ruling stressed that banks must follow the RBI circular titled “Customer Protection: Limiting Liability of Customers in Unauthorised Electronic Banking Transactions,” first issued on 6 July 2017 and updated in May 2022. 

Read More – Loan Fraud Alert: How To Find Out If Someone Has Taken a Loan in Your Name

The order noted that adding charges during an open dispute places an unfair burden on customers already struggling to correct a fraudulent entry. It also restated that billing systems must not continue accumulating penalties once a customer has met reporting requirements.

RBI Liability Rules Mentioned In Government Publications

The following table summarises liability limits taken directly from official RBI pages.

These entries confirm why the Delhi HC held that charges cannot be imposed once a customer meets the reporting deadline. The rules give banks clear instructions and leave little room for deviation.

What Earlier Cases Reveal About Liability?

Legal commentary published by Metalegal in 2024 on a separate Delhi HC case involving SBI explained how courts apply the same rules when a fraud bypasses two-factor authentication and the customer does not share confidential details. 

The commentary pointed out that prepaid payment firms under the PPI framework face identical obligations. These interpretations show how the liability model applies across card networks, digital banking and PPI channels.

Also Read – Precautions Against Financial Fraud: RBI Reports ₹36,014 Crore Lost in FY 2023–24

Before moving to earlier reports covered in the media, there is value in looking at duties placed on banks under government-published rules.

Mandatory Duties Listed In RBI Directives

The table describes actions banks must take once a fraud is reported.

These rules underline why banks cannot impose charges after a fraud report Delhi HC ruling reinforced compliance instead of introducing new norms. Loansjagat had earlier carried advisory material explaining how customers misread liability terms during ATM and card disputes. That context also fits with the present ruling.

Conclusion

The Delhi High Court’s decision issued in early November adds weight to the principle that customer liability depends on reporting time and RBI compliance. The ruling reminded banks that charges added during a valid dispute breach the rules in the RBI circulars quoted above. 

The decline in internet and card fraud incidents reported in FY25 offers a favourable sign, yet the legal and regulatory framework continues to evolve as courts revisit these questions.