RBI Governor Sanjay Malhotra unveiled a one-time compensation up to Rs 25000 for small-value digital fraud victims, covering 85% of losses or the cap via Depositor Education Fund. This no-questions-asked relief for first incidents targets 65% of fraud cases under Rs 55000, enhancing cyber safety amid rising scams.
RBI Governor Sanjay Malhotra announced a groundbreaking one-time compensation framework offering up to Rs 25000 to victims of small-value digital frauds. This initiative, funded largely from the Deposit Education and Awareness Fund, covers 85 percent of losses or the cap, whichever is lower, amid surging cyber threats. Draft guidelines are set for imminent release to bolster customer protection.
Key Highlights
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Compensation capped at Rs 25000 or 85 percent of loss for first-time small-value digital frauds, including OTP sharing cases, with no questions asked on unintended incidents
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RBI bears majority cost via Depositor Education and Awareness Fund surplus; banks contribute 15 percent, customers bear 15 percent residual hit
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Over two-thirds of frauds are small-value, comprising 15 percent of total fraud value; 2024-25 saw 13500 card/internet cases worth Rs 520 crore
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Framework reviews 2017 liability rules for unauthorized electronic transactions, prompted by rapid digital banking growth and rising scams
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Additional RBI measures include draft guidelines on mis-selling prevention via product suitability checks and standardized loan recovery agent norms
RBI's bold move addresses escalating cyber fraud risks in India's booming digital payments landscape. Governor Malhotra emphasized during the February 2026 Monetary Policy Committee meet that this once-in-a-lifetime benefit aims to build trust without encouraging negligence. "As long as customers are defrauded unintentionally, we will compensate," he stated, highlighting the scheme's no-fault approach for eligible cases.
The proposal targets frauds under roughly Rs 55000, where 65 percent of incidents occur, making relief accessible for everyday victims like those hit by phishing or UPI scams. Deputy Governor Swaminathan J noted the fund's adequacy, while broader reforms tackle mis-selling of insurance and mutual funds at bank counters.
This customer-centric overhaul signals RBI's commitment to secure digital transactions, potentially reducing unreported frauds and enhancing financial literacy. With 66.8 percent of 2024-25 frauds linked to cards and internet, the timing aligns with national cyber security priorities.
Sources: Times of India, Caalley (citing Business Standard), The Economic Times
