UPI Payments: NPCI has implemented a new rule regarding transactions made on wrong accounts.

UPI Payments: NPCI has now empowered banks to automatically take action on genuine UPI payment disputes such as fraud, failed transactions or merchant complaints, without seeking prior approval from NPCI

NPCI Rule on UPI: If you are a UPI user, then you must be using it at least 2-4 times a day. From buying vegetables to sending money, UPI has become an important part of our lifestyle. However, the problem arises when you make payment to someone and by mistake that payment gets transferred to someone else. Well, now there is no need to panic about this. To quickly resolve the problems in UPI payment, the National Payments Corporation of India (NPCI) has made a new rule. Now banks have been given the right to automatically take action on genuine UPI payment disputes like fraud, failed transactions or merchant complaints without first seeking permission from NPCI.

According to a circular (No. 184B/2025-2026) of NPCI, banks can directly initiate chargeback for genuine customer disputes with ‘good intentions’. Even though some of their appeals have been rejected earlier, now they will not need to seek prior approval from NPCI. In other words, under the new rules, banks will now be able to take up certain types of rejected chargebacks on their own without first seeking permission from NPCI.

What was the issue?

Till now, if a bank’s dispute requests (chargebacks) for a particular account or UPI ID were repeatedly rejected, NPCI’s system would automatically block further attempts citing ‘negative chargeback rate’ (reason code CD1/CD2). Banks that felt the customer’s case was valid had to manually request NPCI to ‘whitelist’ the dispute, which was time consuming and delayed resolution for customers.

What new changes has NPCI made now?

NPCI’s new system, called RGNB (Remitting Bank Raising Good Faith Negative Chargeback), allows banks to remove these automatic blocks if their internal investigation confirms that the customer’s dispute is valid. NPCI said in the circular, ‘NPCI has simplified the process by allowing chargebacks rejected due to the negative chargeback rule to be lifted by the issuing/remitting bank. This good faith dispute has been termed as RGNB.’ This circular will come into effect from July 15, 2025.

Facility should not be misused to avoid penalty: NPCI

However, NPCI also said that RGNB adjustment should be raised by the issuing/remitting bank only when URCS rejects a normal chargeback with CD1 and CD2 reason codes. The RGNB option is available only through the front end. NPCI further said, ‘This option should not be used to avoid any compensation and penalty, any such altercation will be considered a violation of NPCI guidelines.’

In which cases will RGNB be applicable?

RGNB applies to common UPI complaints where customers want refunds, such as unauthorized transactions (for example, money fraudulently sent from a user’s account), failed UPI payments where money was deducted but not received by the recipient, merchant disputes (for example, payment made for goods/services that were never received), and duplicate/erroneous payments (for example, money transferred twice by mistake).

Let us tell you that, in the year 2025, more than 11.4 billion transactions were done every month by UPI. In such a situation, even a small part of the disputes affects millions of people. This change will directly affect those consumers who are facing unauthorized or wrong transactions.

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