Have you ever tried to withdraw cash from an ATM and the machine showed an error, but the money still got deducted from your account? Or made an online payment that failed, but the amount was debited anyway?
Such failed transactions are more common than you might think. And the worst part? Waiting days — or even weeks — for the money to be refunded, with no clear answers from the bank.
That’s exactly why the Reserve Bank of India (RBI) has introduced strict guidelines to protect customers like you.
Now, banks must follow fixed deadlines to refund money after failed transactions — and if they don’t, they have to pay you ₹100 per day as a penalty.
Let’s break down everything you need to know.
What Happens When a Transaction Fails?
A failed transaction means a payment or withdrawal doesn’t go through, but the money is still debited from your bank account.
This can happen due to:
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Network failures
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ATM errors
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Technical glitches in payment systems
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Bank server issues
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Errors while swiping cards or using UPI/IMPS
In such cases, your money is temporarily stuck in the system. But with RBI’s rules, you now have a guaranteed refund timeline.
RBI’s Turn Around Time (TAT) Guidelines Explained
In September 2019, RBI issued a circular titled “Harmonisation of Turn Around Time (TAT) and Customer Compensation for Failed Transactions”.
This circular sets a time limit for banks to return your money, depending on the type of failed transaction. If the bank doesn’t return the amount within this time, it must compensate you ₹100 per day for every day of delay.
Types of Failed Transactions and Refund Timeframes
Below are the most common types of failed transactions and how long banks have to refund your money:
1. ATM Transaction Failed – Cash Not Dispensed
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What Happens? You try to withdraw cash from an ATM. The transaction fails, but your account is debited.
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RBI Rule: The bank must refund within 5 working days.
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Penalty: ₹100 per day from the 6th day if money is not refunded.
2. Card-to-Card Fund Transfer Failed
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What Happens? You transfer money from your debit card to someone else’s card. The amount is debited, but the receiver doesn’t get it.
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RBI Rule: Refund must happen within T+1 day (Transaction day + next working day).
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Penalty: ₹100 per day from the second day of delay.
3. Point-of-Sale (PoS) or Card Swiping Issues
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What Happens? You swipe your card at a store, and the money is debited but not received by the merchant.
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RBI Rule: Refund within T+1 day.
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Penalty: ₹100 per day of delay.
4. UPI or IMPS Transaction Fails
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What Happens? You transfer money using UPI or IMPS, the amount is debited, but the receiver does not get it.
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RBI Rule: Refund within T+1 day.
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Penalty: ₹100 per day if the refund is delayed.
5. Aadhaar-based Transaction (AEPS) Fails
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What Happens? You try to make a payment using Aadhaar authentication (AEPS), the transaction fails, and money is debited.
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RBI Rule: Refund within 5 working days.
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Penalty: ₹100 per day if not refunded on time.
6. Internet Banking Transaction Fails
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What Happens? You make a payment online using net banking. The transaction fails, but money is deducted.
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RBI Rule: Refund within T+1 day.
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Penalty: ₹100 per day beyond the allowed period.
Automatic Compensation: You Don’t Even Have to Ask
One of the best parts of this RBI rule is that you don’t have to file a claim to receive compensation.
The penalty of ₹100 per day should be automatically credited to your account along with the refund.
However, it’s always smart to monitor your account and keep a record of the failed transaction, just in case the bank delays or misses the automatic process.
How to Track and Follow Up on a Failed Transaction
Here’s what you should do if a transaction fails and money is deducted:
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Note the date, time, and reference number of the transaction.
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Wait for the refund window as per the RBI guidelines (usually 1–5 working days).
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Check your account to see if the refund has arrived.
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If not refunded in time, raise a complaint with your bank (online or offline).
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If the bank doesn’t respond, file a complaint with RBI’s CMS Portal:
https://cms.rbi.org.in
When Will the Bank NOT Pay Compensation?
The bank will only pay a penalty if the delay is the bank’s fault. If the transaction fails due to a mistake from your side, compensation is not applicable.
Examples of customer-side issues:
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Entering incorrect OTP or PIN
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Cancelling the transaction mid-way
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Internet or signal issues on your device
So make sure the failure is truly system-related and not due to user error before expecting a refund with compensation.
Real-Life Example: What to Expect
Let’s say you try to withdraw ₹5,000 from an ATM on 1st June. The transaction fails but the money is deducted.
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Refund deadline: 6th June (5 working days)
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If refund comes on 7th June: You are eligible for ₹100 penalty (1-day delay)
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If refund comes on 10th June: You get ₹400 compensation (4 days delay)
This money should reflect in your account without you having to ask.
What to Do If the Refund or Penalty Doesn’t Come?
Here’s a step-by-step guide:
Step 1: Contact Your Bank
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Use phone banking, online chat, email, or visit the branch.
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Provide your transaction reference ID and date.
Step 2: Wait for Resolution
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Banks usually respond within 7 days.
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Ask for the refund and compensation if the delay is more than the allowed time.
Step 3: File Complaint with RBI
If your issue is not resolved or you’re not satisfied with the bank’s response, use the RBI CMS portal:
You can file complaints related to:
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ATM refund delays
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UPI or IMPS failures
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No compensation received
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Poor response from the bank
Why This Rule Is a Big Win for Indian Bank Customers
In a country where millions of digital payments happen daily, failed transactions are bound to occur.
But earlier, many customers were unaware of their rights or didn’t know what to do when refunds were delayed. With the RBI’s clear rules:
✅ Banks are now accountable
✅ Timelines are defined
✅ Customers receive compensation
✅ Digital banking becomes more trustworthy
It’s a step forward in building a safer, faster, and more reliable financial ecosystem.
Final Thoughts: Stay Aware, Stay Empowered
Next time you face a failed ATM withdrawal or UPI payment, don’t worry — you now have RBI on your side. You know how long it should take for the refund, and you know you deserve compensation if it’s delayed.
All you need to do is:
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Track your transactions
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Be aware of timelines
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Follow up if needed
Information is power — and this is one rule that truly empowers Indian customers in the digital age.
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