RBI proposes Rs 25,000 compensation for small-value digital frauds

Under a proposed one-time framework, RBI plans to compensate customers for small-value digital frauds up to Rs 25,000, with the central bank and banks sharing the cost

The Reserve Bank of India (RBI) on Friday said customers will be compensated up to Rs 25,000 for small-value digital frauds, with the central bank and banks sharing the cost, while customers will bear a small portion of the loss.

 

“It is also proposed to introduce a framework to compensate customers up to an amount of Rs 25,000 for loss incurred in small-value fraudulent transactions,” said Sanjay Malhotra, Governor, Reserve Bank of India.

 

The proposed compensation will be a one-time relief and will cover up to 85 per cent of the amount lost or Rs 25,000, the governor said. While banks will contribute 15 per cent, customers will bear 15 per cent of the loss, and the remaining portion will be provided by the central bank.

 

 

“As long as customers are defrauded, whether on their own accord or anyone else’s accord, no questions asked, we will compensate them as long as it is unintended,” Malhotra said. 

 

Nearly 65 per cent of the frauds reported by banks involve losses of less than Rs 50,000, he added.

 

“The amount is very small for us, but for small customers this is a way of providing some immediate relief and solace,” Malhotra said.

 

In addition, the governor said the RBI will issue three draft guidelines aimed at customer protection — on mis-selling, recovery of loans and engagement of recovery agents, and limiting the liability of customers in unauthorised electronic banking transactions.

 

“We will also publish a discussion paper on possible measures to enhance the safety of digital payments. Such measures may include lagged credits and additional authentication for specific classes of users like senior citizens,” Malhotra said.