RBI acts on fraud: Customers to get up to Rs 25,000 compensation for losses incurred in small value fraudulent transactions, announces RBI

The Reserve Bank of India announced that bank customers who are victims of small value financial fraud resulting in their loss can get up to Rs 25,000 compensation. This announcement was made by RBI governor Sanjay Malhotra on the concluding day of RBI monetary policy meet (MPC).

The Monetary Policy Committee (MPC) held its 59th meeting from February 4 to 6, 2026, under the chairmanship of Sanjay Malhotra, Governor, Reserve Bank of India. After a detailed assessment of the evolving macroeconomic and financial developments and the outlook, the MPC voted unanimously to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 5.25 per cent.

For customer protection, the RBI proposed to introduce a framework to compensate customers up to an amount of Rs 25000 for loss incurred in small-value fraudulent transactions.


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Rahul Sharma, CFO, BLS E-Services said that the proposed framework will compensate customers up to Rs 25,000 for losses from small-value fraudulent transactions. We welcome these initiatives and will collaborate closely with our banking partners to implement these safeguards."

Santanu Sengupta, Global Banking & Board Leader and Former Managing Director, Wells Fargo said to ET Wealth Online, that the RBI’s proposal to introduce a formal framework to compensate customers up to Rs 25,000 for losses arising from small-value fraudulent transactions is a significant step in strengthening trust in the digital financial ecosystem.

Sengupta says: "It sends a clear signal that consumer protection must keep pace with rapid digital adoption. As digital payments scale rapidly, trust becomes the system’s most critical asset. This move recognises that even small frauds can cause disproportionate harm to individuals, particularly first-time and vulnerable users."

According to Sengupta, by placing accountability on regulated entities to improve controls, monitoring and grievance redressal, the RBI is nudging them to shift from reactive dispute handling to proactive risk prevention.

The RBI also said that they 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 class of users like senior citizens.

The RBI also said that in the financial inclusion space, they have comprehensively reviewed the Lead Bank Scheme, Kisan Credit Card Scheme and the Business Correspondent Model. Hence the RBI will issue draft revised guidelines with respect to them. A unified reporting portal will also be launched by RBI for better management of LBS data.