Many of us have experienced a situation where we try to withdraw money from an ATM, the transaction fails, but the amount still gets debited from our account. Naturally, this creates panic and confusion. But there's good news—you don’t need to worry. The Reserve Bank of India (RBI) has laid out clear and strict guidelines for such failed transactions.
In this article, we will explain what you should do in case of a failed transaction, what responsibilities banks have, and when you should expect your money back. We’ll also talk about how much compensation you are entitled to if the bank delays the refund and how to claim it.
1. What Is a Failed Transaction and Why Does It Happen?
A failed transaction means you attempted to withdraw or transfer money via ATM, debit card, or internet banking, but the transaction didn’t go through due to some technical glitch or network error. However, the money still got deducted from your account.
Common reasons:
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Poor or unstable network connection
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Insufficient cash in the ATM
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Server downtime
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Damaged or unreadable debit card
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Wrong PIN entry or authentication failure
2. RBI's Clear Guidelines: It’s the Bank’s Responsibility to Refund
RBI issued a circular in May 2011 specifying the guidelines:
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If an ATM transaction fails and money is debited, the bank must refund the amount within 7 working days.
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If the bank fails to do so, it must pay a compensation of ₹100 per day for each day of delay beyond 7 days.
These rules apply not just to ATMs but also to UPI, internet banking, card payments, and other digital transactions.
3. What Should the Customer Do If Money Is Not Refunded?
If your money is not refunded even after a failed transaction, follow these simple steps:
Step 1: Register a Complaint Immediately
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Contact your bank’s customer care service or visit the nearest branch.
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Submit your complaint in writing or file it through the bank’s website or mobile app.
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Note down the date of complaint and the complaint reference number.
Step 2: Keep Proof of the Transaction
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ATM slip (if available)
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SMS notification from the bank
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Transaction details from bank statement
These documents will help you prove that money was debited.
Step 3: No Refund After 7 Days? Take Further Action
If the bank doesn’t refund the money within 7 working days, then:
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Send a written reminder to the bank.
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Still no response? File a complaint with the Banking Ombudsman under the RBI.
4. Rules for Compensation: ₹100 Per Day for Delay
According to RBI:
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If the bank fails to refund within 7 working days, it must credit ₹100 per day as compensation.
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This compensation must be credited automatically—you don’t need to file a separate claim.
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The compensation and refund should both be credited on the same day.
Example: If the bank refunds your money on the 12th day, you are entitled to 5 days of compensation = ₹500.
5. When and How to File a Complaint?
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You must register a complaint within 30 days of the failed transaction.
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If you delay beyond 30 days, you may lose the right to receive compensation, though the money will still be refunded.
6. What Is Annexure-5 Form and When Is It Used?
If you have filed a complaint but still haven’t received your money, you can fill out Annexure-5, a form used to escalate the issue to the Banking Ombudsman.
Once you submit this form:
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The bank receives a formal notice.
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The compensation of ₹100 per day starts from the date you submit the form.
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If there’s a delay of another 10 days, the bank owes you ₹1000 in compensation.
7. Transaction at Other Bank’s ATM? Same Rules Apply!
If you used another bank’s ATM for the transaction, the rules still apply.
Your own bank is responsible for ensuring that the refund is processed, regardless of the ATM used.
8. These Rules Also Apply to Digital Transactions
Failed transactions are not limited to ATMs. With the rise of digital payments, issues are common in:
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UPI payments
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Debit card purchases
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Online banking transfers (IMPS, NEFT, RTGS)
RBI’s guidelines apply to all these payment modes. The bank must refund your money and compensate you if there's a delay.
9. The Customer Must Stay Vigilant
Banks usually process refunds on time, but some cases slip through the cracks. Customers must stay alert and take responsibility for following up.
Always remember:
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Save transaction slips or take screenshots
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Note complaint dates and references
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File a complaint within 30 days
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Escalate the issue if necessary
10. How to File a Complaint with Banking Ombudsman
If your bank ignores your complaint or delays the process, you can file a complaint online via the RBI’s Complaint Management System (https://cms.rbi.org.in/).
Documents you may need:
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Transaction details
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Complaint reference number
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Bank’s written response (if any)
11. Final Thoughts: Your Money, Your Right
In today’s digital world, failed transactions are not rare. But that doesn’t mean your money is lost. RBI has empowered customers with strong rules that hold banks accountable.
As a customer, you must be aware of your rights. When you know what to do, how to complain, and when to escalate, you can confidently protect your hard-earned money.
Quick Recap: What You Need to Know
| Situation | What To Do |
|---|---|
| Money debited, transaction failed | File a complaint with your bank |
| Refund not received in 7 working days | Bank must pay ₹100 per day as compensation |
| Complaint filed after 30 days | You may lose the right to compensation |
| No response from bank | Fill out Annexure-5 and file with Banking Ombudsman |
FAQs: Your Common Questions Answered
Q. Do I need to apply to receive compensation?
A. No. The bank must automatically credit the compensation to your account along with the refund.
Q. Do these rules apply to other banks' ATMs too?
A. Yes. It doesn't matter whose ATM you used. Your bank is responsible for resolving the issue.
Q. What happens if money is refunded after 7 working days?
A. You are entitled to ₹100 per day as compensation for each day of delay.
Final Advice
If you frequently use digital transactions, always keep a record of all your transactions. RBI has provided these protections so that you, the customer, are not at a loss. But to benefit from them, you must stay informed and alert.
So next time a transaction fails, don’t panic—act quickly, follow the rules, and claim your rightful refund and compensation.
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