Online Payment Fraud: The Reserve Bank of India (RBI) is preparing a new framework to protect customers against losses from small-value fraudulent digital transactions. In a recent monetary policy address, RBI Governor Sanjay Malhotra confirmed that the central bank will propose rules allowing compensation of up to ₹25,000 to eligible victims of online fraud.
This move is part of a broader set of measures introduced by the RBI to strengthen customer protection and improve the safety of digital payments across India. The draft guidelines are expected to be released soon.
What the New Compensation Framework Covers
According to the RBI, the compensation framework will revisit existing rules on customer liability in cases of electronic banking fraud. At the post-Monetary Policy Committee (MPC) press conference, key points of the proposed system were outlined:
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The compensation benefit will be granted only once in a lifetime to a customer. It is not an annual entitlement.
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The lifetime limit has been introduced to encourage users to stay vigilant and avoid repeated mistakes.
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The maximum compensation amount is capped at ₹25,000.
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The actual payout will be calculated as 85% of the loss or ₹25,000, whichever is lower.
How the Compensation Will Work
Under the proposed rules, the amount a customer receives will depend on the value of the loss:
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If the fraud loss is ₹50,000, 85 percent equals ₹42,500 — but the payout will be limited to ₹25,000.
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If the fraud loss is ₹20,000, 85 percent equals ₹17,000 — so the customer would receive ₹17,000.
These provisions aim to strike a balance between consumer protection and responsible use of digital payment systems.
Fraud Cases Remain High
Data released by the RBI shows that Indian banks reported 13,469 cases of card and internet-based fraud in the fiscal year 2024-25, with total losses of ₹5.2 billion. This follows 29,080 reported frauds and ₹14.57 billion in losses in 2023-24.
Other RBI Measures for Customer Protection
In the same announcement, the RBI also said it will issue guidelines on several related areas:
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Misselling of financial products by lenders.
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Recovery practices used by loan agents.
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A discussion paper on enhancing the safety of digital payment systems.
Online Payment Fraud in India : The RBI highlighted the need to ensure that third-party products offered at bank counters are suitable for customers and aligned with individual risk appetites. New measures under consideration include the introduction of “lagged credits” and additional authentication requirements for senior citizens using digital payments.
