RBI to compensate up to Rs 25,000 for small digital fraud, even with OTP shared
RBI to compensate up to Rs 25,000 for small digital fraud, even with OTP shared
RBI proposes up to Rs 25,000 compensation for small-value digital frauds, even when OTPs are shared, with a one-time lifetime benefit and new safeguards.
In a bid to bolster consumer protection in digital payments, the RBI unveiled a plan to compensate victims of small-value digital frauds up to Rs 25,000 per case. The scheme includes a lifetime benefit, meaning eligible customers can claim this support only once in their lifetime. Notably, victims will be eligible to receive relief even if they have shared a one-time password (OTP). The central bank said the payout would cover 70% of the loss, while the remaining 30% would be shared between the customer and the bank. The funds for the payout would come from the Deposit Education and Awareness Fund's surplus income, including unclaimed deposits.
Additionally, RBI will publish three draft guidelines for public consultation. The first targets mis-selling of financial products to ensure greater transparency and accountability among banks and financial institutions. The second focuses on loan recovery practices to prevent harassment and unfair treatment by recovery agents. The third seeks to limit customer liability in cases of unauthorised electronic banking transactions. A separate discussion paper will outline steps to improve safety and security of digital payments, with potential measures such as lagged credits and heightened authentication for certain user categories.
Industry observers note that most digital fraud losses are small in value but frequent, with many cases below Rs 55,000. The RBI's approach aims to strike a balance between consumer protection and preserving financial institutions' risk management, while encouraging safer digital payments.
