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NPCI’s new rule lets banks override automated blocks on genuine UPI disputes without prior NPCI approval from July 15, 2025, to speed up transaction issue resolutions.
Under the new guidelines, banks will now be able to raise certain declined chargebacks on their own without requiring prior whitelisting approval from NPCI.
NPCI Circular On UPI Payment Disputes: In a move set to accelerate resolutions of UPI users caught in payment disputes, the National Payments Corporation of India (NPCI) has decided to grant banks new authority to override automated blocks on genuine UPI payment disputes — including cases of fraud, failed transactions, or merchant grievances — without seeking the NPCI’s prior approval.
According to an NPCI circular (No. 1848/2025-2026) dated June 20, effective July 15, 2025, banks can directly raise “good faith” chargebacks for genuine customer disputes – even if they’ve hit previous rejection limits – without needing the NPCI’s prior approval.
In other words, under the latest guidelines, banks will now be able to raise certain declined chargebacks on their own without requiring prior whitelisting approval from NPCI.
What’s The Issue?
Currently, if a bank’s dispute requests (chargebacks) for a specific account or UPI ID pair get rejected too often (11th decline for account-based disputes, 8th for UPI ID pairs), the NPCI’s system automatically blocks further attempts citing “negative chargeback rates” (Reason Codes CO1/CO2). Banks believing a customer’s case was valid had to manually petition NPCI to “whitelist” the dispute – a time-consuming process delaying resolutions.
What Has NPCI Decided To Change Now?
NPCI’s new mechanism, dubbed RGNB (Remitting Bank Raising Good Faith Negative Chargeback), allows banks to override these automatic blocks if their internal due diligence confirms the customer’s dispute is legitimate.
“The NPCI has simplified the process by allowing issuing/remitting bank to raise chargeback which are rejected due to negative chargeback rule. The good faith dispute has been named as RGNB (Remitting bank raising good faith negative chargeback),” the NPCI said in the circular.
The circular will be effective June 15, 2025. Full circular can be read here.
‘Facility Should Not Be Used To Avoid Penalties’: NPCI
However, the NPCI stated that the RGNB adjustment should be raised by the issuing/remitting bank only when URCS declines the normal chargeback with CD1 and CD2 reason code. RGNB option is available only through front end.
“This option should not be used to avoid any compensations and penalties, any deviation shall be treated as non-compliance to the NPCI guidelines,” it added.
RGNB applies to common UPI grievances where customers seek refunds, such as unauthorised transactions (e.g., money sent fraudulently from a user’s account), failed UPI payments where money was debited but not received by the recipient, merchant disputes (e.g., paid for goods/services never delivered), and duplicate/incorrect payments (e.g., accidental double transfers).
With UPI processing over 11.4 billion transactions monthly (May 2025), even a tiny fraction of disputes affects millions. This change directly impacts consumers facing unauthorised or erroneous transactions who rely on their bank to fight their case.
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to markets, economy and companies. Having a decade of experience in financial journalism, Haris has been previously asso…Read More
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to markets, economy and companies. Having a decade of experience in financial journalism, Haris has been previously asso… Read More
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