RBI Proposes ₹25,000 Compensation Framework for Cyber Fraud Victims in India

The Reserve Bank of India has proposed a compensation framework aimed at strengthening customer protection in cases of small value digital payment frauds. The proposal was outlined during the latest monetary policy announcement. 

RBI Framework for Cyber Fraud Compensation 

On February 6, 2026, the Reserve Bank of India stated that it plans to introduce a framework to compensate customers up to ₹25,000 for losses arising from small value fraudulent digital transactions. The proposal forms part of broader measures to enhance safety in electronic payment systems. 

The framework focuses on limiting customer liability in unauthorised electronic banking transactions, particularly where prompt reporting norms are met. 

Draft Guidelines on Customer Protection 

The central bank indicated that 3 draft guidelines will be issued covering mis selling practices, recovery of loans and engagement of recovery agents, and limitation of customer liability in unauthorised transactions. These guidelines aim to standardise processes across regulated entities. 

Discussion Paper on Digital Payment Safety 

The RBI also plans to publish a discussion paper outlining possible measures to strengthen digital payment security. These measures may include lagged credits and additional authentication mechanisms for specific user categories, including senior citizens. 

Read More: Lenders Seek RBI Liquidity Relief to Meet Surging Loan Demand! 

Repo Rate Decision Context 

Alongside the announcement, the Monetary Policy Committee kept the repo rate unchanged at 5.25%. The decision followed earlier rate cuts totalling 125 basis points since February 2025, reflecting evolving macroeconomic conditions. 

Conclusion 

The proposed ₹25,000 compensation framework reflects the RBI’s focus on improving customer protection in digital transactions. Along with draft guidelines and payment safety measures, the proposal outlines a structured approach to addressing small value cyber fraud losses. 

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