In a move aimed at strengthening consumer protection in the digital payments ecosystem, the Reserve Bank of India (RBI) has proposed a compensation framework to provide relief to individuals affected by online fraud involving small-value transactions. Under the draft guidelines, victims of unauthorized digital transactions resulting in financial losses of up to ₹25,000 may be eligible for compensation, subject to defined conditions.

Key Highlights

• RBI proposes ₹25,000 compensation cap for small-value digital fraud losses.
• New framework aims to boost accountability and faster grievance redressal.

The proposal seeks to enhance accountability among banks, non-banking financial companies, and payment service providers by encouraging faster grievance redressal and timely reimbursement. The central bank has highlighted the growing incidence of cyber fraud, especially among retail users, and emphasized the need for stronger safeguards as digital payments continue to expand rapidly across the country.

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The proposed framework outlines specific timelines for reporting fraud, investigation, and settlement of claims. Institutions that fail to resolve complaints within the stipulated period may be required to compensate affected customers. The RBI aims to balance consumer protection with systemic stability by promoting better risk management practices and stronger cybersecurity controls.

By introducing this measure, the regulator intends to reinforce trust in digital transactions, reduce financial distress among victims, and improve the overall resilience of India’s rapidly evolving digital financial ecosystem.