Amid a rise in digital fraud cases, the Reserve Bank of India (RBI) on Thursday announced that banking customers will receive compensation of up to Rs 25,000 for fraudulent transactions. RBI Governor Sanjay Malhotra said customers would be eligible for compensation even in cases where they had shared a one-time password (OTP) with fraudsters.
Compensation to be paid from DEA fund
Central bank officials clarified that the compensation will be paid from the Rs 85,000-crore Depositor Education and Awareness (DEA) Fund.
They added that customers will be eligible for compensation only once in their lifetime, provided no malafide intent is established.
Majority of fraud cases below Rs 50,000
RBI officials noted that although the overall value of digital frauds remains relatively low, nearly two-thirds of such cases involve amounts below Rs 50,000. This means a large number of fraud victims are likely to benefit from the compensation framework.
“As long as they are defrauded, whether on their own accord or anyone else’s, no questions asked, Rs 25,000 will be paid. We will compensate them as long as the transaction is unintended and the money is lost,” Malhotra said.
Customers to bear part of the loss
Malhotra emphasised the need for customers to have “skin in the game”. As per the proposed framework, 15 per cent of the fraud amount will have to be borne by the account holder, even if the fraud amount is below Rs 25,000.
In cases involving higher-value frauds, the maximum compensation will be capped at Rs 25,000.
Draft framework and additional safety measures
The RBI Governor said a draft compensation framework will be released soon for public consultation.
Deputy Governor Swaminathan J said the compensation will be funded through the DEA Fund, which also includes deposits unclaimed for over 10 years. He added that the financial impact of the compensation may not be significant.
Separately, Deputy Governor Shirish Murmu said awareness campaigns encouraging depositors to reclaim unclaimed deposits have increased recoveries to around Rs 5,000 crore per year.
Malhotra also announced that the RBI will introduce additional safety tools to prevent fraud, including lagged credit to beneficiary accounts and extra authentication measures to protect senior citizens.
ALSO READ: iPhone 17e may launch earlier than expected; processor and charging details surface
