MUMBAI: Reserve Bank governor Sanjay Malhotra has said the central bank will pay 70% of the small value money or up to Rs 25,000 lost in fraudulent transactions without any questions being asked to the customer for the first time instances.
During the customary post-policy presser here Friday, when the central bank left the key policy rates unchanged, he said the rest of the 30% of the loss will be equally shared by the customer (15%) and the bank to ensure there all the parties have their skin in the game.
This announcement is among a number of measures the central bank announced for better customer protection and digital payments safety as part of the regulatory measures including stricter guidelines on mis-selling, loan recovery, and customer liability, announced during the policy announcement.
“A discussion paper will soon be released to ensure stronger digital payment security measures,” Malhotra said.
According to the official RBI data, banks reported 13,469 fraud cases related to card and internet-based transactions during fiscal 2025, involving losses of Rs 520 crore, which was massively lower than the 29,080 cases and losses of Rs 1,457 crore in the previous financial year.
“Introducing a framework to compensate customers up to an amount of Rs 25,000 for losses incurred in fraudulent transactions,” the governor said, adding this will be done upon asking no questions including whether the affected customer has shared the OTP or not.
“Even if the customer has shared the OTP and if the incidence of fraud was first time,” the customer is eligible for the compensation, less than 15% of the total loss,” the governor clarified.
The governor further said a vast majority to the tune 65% 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 while in value, they constitute small proportion, but in numbers 65% have less than Rs 55,000 in terms of amount," Malhotra noted in his post-MPC press briefing.
When asked where would the money be sourced for this compensation or it would be chipped in from the unclaimed deposits, deputy governor Swaminathan J said the compensation money will from the depositor education fund of the central bank and the money lying in the unclaimed deposits belongs to the depositors and cannot be used for this purpose. But the interest accrued on such money along with the corpus in the depositor education fund would be used for this compensation.
When asked how much money is thus lying in unclaimed deposits, across the banks, deputy governor SC Murmu said the amount totals Rs 85,000 crore and interest.
To another question of how has the various campaigns that the central bank has launched in recent years helped in paybacks, Murmu said “Immensely, as before the latest campaign the monthly payout was averaging under Rs 200 crore which since October has averaged close to Rs 1,000 crore."
“Since the latest campaign, banks have paid back close to Rs 35,00 crore and Rs 1,500 crore by other regulators primarily Sebi. While in December 2025 the banks paid back Rs 1,043 crore to the claimants of such deposits, in November this was Rs 802 crore and Rs 759 crore in October,” the junior deputy governor said.
Malhotra listed three draft guidelines –mis-selling, recovery of loans and limiting liability of customers on unauthorised electronic banking transactions- for online payments safety.
The central bank chief also pointed out that a discussion paper will be published soon to “enhance safety of payments which will may include lacked credit, and additional authentication for specific classes of users like senior citizens."
In addition, the regulator will release a discussion paper proposing measures to strengthen digital payment security, including the introduction of “lagged credits” and enhanced authentication norms for senior citizens.
"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.
Draft guidelines on customer liability in cases of electronic banking fraud will be issued shortly, the governor said in his monetary policy address. The framework will reassess existing safeguards governing customer responsibility in digital fraud cases, the central bank said in a statement.
Highlighting the risks accompanying the rapid expansion of digital payments, the RBI noted the past decade has seen a rise in increasingly sophisticated frauds targeting unsuspecting customers.