According to a circular (No. 184B/2025-2026) of NPCI, banks can directly initiate chargebacks for genuine customer disputes with ‘good intentions’. Even though some of their appeals have been rejected earlier, they will no longer need to seek prior approval from NPCI. In other words, under the new rules, banks will now be able to automatically raise certain types of rejected chargebacks without seeking prior permission from NPCI.
From buying vegetables, ration to sending money, UPI has become an important part of our lifestyle. However, the problem arises when you pay someone and by mistake that payment gets transferred to someone else. Well, now there is no need to panic about it. To resolve issues in UPI payments quickly, the National Payments Corporation of India (NPCI) has made a new rule. Banks will now have the authority to take automatic action on genuine UPI payment disputes like fraud, failed transactions or merchant complaints, without taking prior approval from NPCI.
According to a circular (No. 184B/2025-2026) of NPCI, banks can directly initiate chargebacks for genuine customer disputes with ‘good intentions’. Even though some of their appeals have been rejected earlier, they will no longer need to seek prior approval from NPCI. In other words, under the new rules, banks will now be able to automatically raise certain types of rejected chargebacks without seeking prior permission from NPCI.
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 legitimate had to manually request NPCI to ‘whitelist’ the dispute, which was a lengthy process for customers.
What new change 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 legitimate. NPCI said in the circular, ‘NPCI has simplified the process by allowing the issuer/remitting bank to raise the chargeback rejected due to the negative chargeback rule. This good faith dispute has been named RGNB.’ This circular will be effective from July 15, 2025.
However, NPCI also said that RGNB adjustment should be raised by the issuing/remitting bank only when URCS rejects 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 diversion will be considered as 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 was never received), and duplicate/incorrect payments (for example, money transferred twice by mistake). Let us tell you that, in the year 2025, more than 11.4 billion transactions were made through UPI every month. In such a situation, even a small fraction of disputes affects millions of people. This change will directly impact consumers who are facing unauthorized or incorrect transactions.
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