RBI Proposes Rs 25000 Compensation For Small Value Digital Frauds
"There is a framework which we will be taking out for compensation of small frauds because we have observed that while in value, they constitute small proportion, but in numbers 65 per cent have less than Rs 55,000 in terms of amount. So as long as they are defrauded, whether on their own accord or anyone's accord, no questions asked, Rs 25000 or 85 per cent": Sanjay Malhotra
MUMBAI: The Reserve Bank of India (RBI) governor Sanjay Malhotra on Friday proposed to introduce a framework under which a compensation of up to Rs 25,000 will be paid to the victims of small-value online frauds.
Speaking at the post monetary policy press conference, Malhotra said that a vast majority, around 65 per cent of the digital frauds are worth less than Rs 55,000.
"There is a framework which we will be taking out for compensation of small frauds because we have observed that while in value, they constitute small proportion, but in numbers 65 per cent have less than Rs 55,000 in terms of amount," Malhotra told reporters.
“Even if the customer has shared the OTP and if the incidence of fraud was first time,” the customer is eligible for the compensation,” the governor added.
The central bank also announced a series of measures aimed at strengthening customer protection, expanding financial inclusion and improving the flow of credit. It would be issuing three guidelines to protect customers and
safeguard the financial system---one, relating to mis-selling; two, regarding the recovery of loans and engagement of recovery agents; and
three, on limiting liability of customers in unauthorised electronic banking transactions.
Currently the guidelines on loan recovery are different for banks and NBFCs. It has now been decided to review and
harmonize all the extant conduct related instructions on engagement of recovery agents for better monitoring and control and uniform practices in respect of loan recovery.
The central bank chief pointed out that a discussion paper will be published soon to “enhance safety of payments”.
These measures could include mechanisms such as lagged credits, where funds are credited after a brief delay to allow verification and additional authentication requirements for certain categories of users, including senior citizens, who may be more vulnerable to digital fraud.
"There is a felt need to ensure that third party products and services that are being sold at the bank counters are suitable to customer needs and are commensurate with the risk appetite of individual clients," the central bank said.
RBI data showed that the number of banking frauds has increased from 13,494 in FY23 to 23,879 in FY25.
Digital frauds particularly using UPI have accelerated. UPI, India’s most preferred digital payment mode, has been targeted by fraudsters using compromised mobile numbers, fraudulent QR codes designed to steal money or credentials.
