How long does a bank have to refund a failed UPI or NEFT transaction?

Question

My UPI payment failed but the money was debited and never credited back, and a separate NEFT transfer also seems to have vanished. I want to know the timelines the bank must follow. I have been reading conflicting things online and I would like to understand what Indian law actually says about this, which Act and Section applies, what the realistic timelines and costs are, and what I should be doing right now to protect my position. If the matter can be resolved without litigation I would prefer that route, but I want to know what my rights are before I agree to anything or sign any document.

MyVakeel Legal Desk · Accepted Answer

How long does a bank have to refund a failed UPI or NEFT transaction? is governed in India primarily by RBI Circular on Compensation for Failed Transactions using Authorised Payment Systems, 2019, Payment and Settlement Systems Act 2007, Section 23A, Consumer Protection Act 2019, Section 2(11) and NPCI UPI Procedural Guidelines. The short answer is set out below, followed by the practical steps most people in this situation need to take. Read it alongside the specific provisions named, because the exact relief available to you turns on the facts you can prove on paper.

The RBI's harmonised Turn Around Time framework fixes specific timelines for each type of failed transaction, for instance a UPI transaction where the beneficiary account is not credited but the amount is debited must be auto-reversed within the timeline specified, typically within a maximum of T+1 working day.

For an NEFT transaction, if the beneficiary account is not credited or the amount is not returned to the remitter within a fixed number of hours, the remitting bank must proactively credit the beneficiary or reverse the debit and pay compensation for the delay.

Compensation for delay beyond the prescribed Turn Around Time is fixed at Rupees 100 per day of delay under the RBI's 2019 circular, and this compensation is payable automatically to the customer's account without a separate request.

Section 23A of the Payment and Settlement Systems Act 2007 makes the RBI's directions on payment system operations binding, and non-compliance by a bank is a regulatory violation as well as a deficiency in service under Section 2(11) of the Consumer Protection Act 2019.

Where a UPI or NEFT transfer has gone to a wrong or unintended beneficiary due to a customer's own error, the remitting bank must still assist in tracing and requesting return of funds under the NPCI dispute resolution mechanism, though this differs from a system failure case.

What to do next: 1) Save the UPI/NEFT transaction reference number, timestamp and the debit confirmation; 2) Raise a dispute through your bank's app, UPI app grievance option, or the NPCI complaint portal; 3) Confirm whether the auto-reversal and Rupees 100 per day compensation have been credited within the TAT; 4) Escalate to the RBI Integrated Ombudsman or consumer commission if the bank fails to resolve within the timeline.

If the other side has already issued a notice, filed a case or set a deadline, treat the matter as time-sensitive — most remedies under RBI Circular on Compensation for Failed Transactions using Authorised Payment Systems, 2019 carry limitation periods, and a delay you cannot explain weakens an otherwise strong case. You can post the details on the MyVakeel forum for a practising advocate to review, or book a paid consultation with a Bar Council verified lawyer in this practice area.