RBI to Introduce Digital Fraud Liability Framework with Compensation of Up to ₹25,000

The Reserve Bank of India (RBI) will introduce a limited liability framework for digital banking frauds from January 1, 2027, to strengthen customer protection and enhance trust in digital payments. According to CNBC-TV18, RBI Governor Sanjay Malhotra said the framework will provide compensation of up to ₹25,000 for eligible victims of small-value digital frauds. 

Speaking in an interview with DD News, Malhotra said the new framework is part of the RBI's broader strategy to improve fraud prevention, strengthen supervisory mechanisms, and safeguard customers as digital transactions continue to grow across the country. 

What Is the New Digital Fraud Framework? 

Under the proposed framework, customers who fall victim to small-value digital banking frauds will be eligible for compensation of up to ₹25,000, subject to the framework's terms and conditions. The new rules will come into effect on January 1, 2027. 

According to CNBC-TV18, the RBI governor said that while preventive measures are being strengthened, fraud may still occur. The limited liability framework is intended to provide an additional layer of protection for customers and maintain confidence in digital banking services. 

RBI Focuses on Fraud Prevention and Customer Awareness 

During the interview with DD News, Malhotra said the RBI's approach to fraud management is centred on prevention, early identification of risks and customer awareness. He added that the central bank is working closely with banks to strengthen supervisory systems and improve the safety of digital transactions. 

The RBI has also been conducting awareness initiatives such as Digital Payment Awareness Week and the "RBI Kehta Hai" campaign. These programmes use television, print, digital, and social media platforms to educate customers, including those in rural areas, about cyber frauds and safe digital payment practices. 

Read More: RBI Cancels Registration of 18 NBFCs After Surrender of Licence 

AI and Cybersecurity Remain Key Priorities 

The RBI governor also highlighted that cybersecurity and data privacy remain critical as digital payments continue to expand in India. He said banks are being encouraged to adopt technologies such as artificial intelligence (AI) to improve customer service and operational efficiency while effectively managing emerging risks. 

The announcement comes at a time when India has witnessed rapid growth in digital payments alongside increasing instances of phishing attacks, online scams and unauthorised transactions. 

Conclusion 

The RBI's proposed limited liability framework, effective from January 1, 2027, aims to strengthen customer protection against digital banking frauds by providing compensation of up to ₹25,000 for eligible cases. Alongside preventive measures and awareness campaigns, the initiative is expected to enhance confidence in India's growing digital payments ecosystem. 

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