RBI Flags Tighter Consumer Protection Push Amid Rising Digital Frauds

The Reserve Bank of India will issue three sets of draft guidelines covering mis-selling, loan recovery through engagement of agents, and limited customer liability for unauthorised electronic transactions, Governor Sanjay Malhotra said. He added that the central bank is considering a framework to compensate customers for losses of up to ₹25,000 in small-value fraudulent transactions.

The RBI will also release a discussion paper outlining additional measures to enhance the safety of digital payments. These could include lagged credit mechanisms and extra layers of authentication for vulnerable users, such as senior citizens.

Providing clarity at the post-policy press conference, Malhotra said the proposed compensation for cyber fraud would be a one-time relief per customer, underscoring that the measure is intended as a limited safeguard rather than a recurring reimbursement mechanism. The framework, he indicated, is aimed at offering swift relief in genuine cases of small-value fraud while preserving customer incentives to follow due diligence and safe digital practices.

Deputy Governor Swaminathan J added that any compensation extended under the proposed framework would not be sourced from unclaimed deposits, addressing concerns around the funding of such payouts. He said the RBI is conscious of protecting depositor interests while strengthening consumer confidence in digital payment systems.

The announcements reflect growing regulatory concern over the rise in digital fraud, including cases involving the exploitation of vulnerable sections, which have also drawn attention from lawmakers. The proposed steps form part of a broader push by the RBI to strengthen customer service and consumer protection, recognising that rapid changes in the digital delivery of financial services require continuous updating of regulatory safeguards.