India to Compensate Customers for Small Digital Frauds, RBI Says
India will compensate customers for losses from small-value digital frauds, with payouts capped at 25,000 rupees, Reserve Bank of India Governor Sanjay Malhotra said on Friday. The move comes amid a rise in fraud cases as digital payments expand rapidly across the country. Customers will receive a one-time relief covering up to 85% of the amount lost or 25,000 rupees, whichever is lower.
Malhotra said compensation would be provided without extensive scrutiny, as long as the loss was unintended, whether caused by the customer or another party. He noted that around 65% of frauds reported by banks involve amounts below 50,000 rupees, making the impact significant for smaller customers even if the sums are modest for banks. The compensation may be funded through a depositor education and awareness fund, RBI officials said, though detailed rules are yet to be issued.
Separately, the central bank said it would tighten oversight on the mis-selling of financial products by lenders and issue fresh guidelines on loan recovery practices and the use of recovery agents. The RBI also plans to release a discussion paper on improving digital payment safety, including proposals such as lagged credits and additional authentication measures, particularly to protect senior citizens.
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