RBI proposes Rs 25,000 shield for cyber fraud victims in India

MUMBAI: The Reserve Bank of India has proposed a new framework to compensate bank customers up to Rs 25,000 for losses arising from small-value fraudulent digital transactions, marking a major push to strengthen consumer protection in the fast-growing payments ecosystem.

Announcing the final bi-monthly monetary policy of the financial year, RBI governor Sanjay Malhotra said the central bank would shortly release draft revised instructions for public consultation, including limits on customer liability in unauthorised electronic banking transactions.

The move updates rules last issued in 2017, which set timelines and scenarios for zero or limited customer liability. Malhotra said rapid technological adoption across banking and payments systems had made a comprehensive review necessary.

Alongside the fraud compensation framework, the RBI will issue three separate draft guidelines covering mis-selling of financial products, recovery of loans and conduct of recovery agents, and advertising and sales practices by regulated entities.

Malhotra flagged growing concerns around third-party financial products being sold at bank counters without adequate suitability checks, adding that new instructions would ensure offerings match customer needs and risk appetite.

The central bank will also harmonise existing rules governing loan recovery agents across different regulated entities to improve conduct standards and customer protection.

In a parallel capacity-building push, Malhotra announced the launch of Mission Saksham, a sector-wide training and certification programme for urban co-operative banks. The initiative aims to upskill around 1.40 lakh participants through physical training programmes and a scalable digital learning platform, with content delivered in regional languages wherever possible.