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As digital payments continue to grow rapidly in India, incidents of fraudulent transactions have also increased. In a major move to protect consumers, the Reserve Bank of India (RBI) has announced a new framework aimed at compensating victims of unauthorized or fake digital transactions. Under this proposed policy, affected customers may receive compensation of up to ₹25,000, offering significant financial relief to those impacted by online payment fraud.

RBI Governor Sanjay Malhotra revealed that the central bank is preparing a structured compensation mechanism to ensure quicker and fairer recovery of losses suffered due to digital fraud. According to the announcement, victims may be eligible to receive either up to ₹25,000 or as much as 85% of the total fraudulent transaction amount, provided the transaction is proven to be genuinely unauthorized and not intentional.

What the RBI’s New Fraud Compensation Framework Means

The new RBI proposal is designed to strengthen consumer protection in India’s fast-expanding digital payments ecosystem. The framework aims to:

• Provide financial relief to victims of fake or unauthorized transactions

• Encourage banks and payment platforms to improve fraud detection systems

• Increase accountability in digital payment security

• Boost consumer confidence in online banking and UPI platforms

Additionally, RBI plans to release a discussion paper on improving payment safety, which may include new security measures such as:

• Stricter transaction limits

• Extra authentication steps for high-risk users

• Enhanced protection for senior citizens

• Stronger verification requirements for large-value digital payments

How Big Is the Digital Payment Fraud Problem in India?

India ranks among the world’s top countries in digital payment volume, processing massive daily transaction numbers. While fraud incidents have risen alongside this growth, RBI data suggests the overall fraud rate remains relatively controlled.

According to P. Vasudevan, a senior RBI official, data shared at the Shield 2026 Conclave in Hyderabad reveals:

• Only 1 fraudulent transaction occurs out of every 1,01,242 digital transactions

• For every ₹1 lakh in digital payments, the average loss due to fraud is just ₹1.40

• As of January 31, 2026, India processes an estimated 81 crore digital transactions daily

• The total daily digital transaction value is approximately ₹9 lakh crore

These figures highlight both the scale of India’s digital economy and the importance of robust fraud prevention systems.

RBI’s Repo Rate Decision: No Change Announced

Alongside its fraud-related announcement, the RBI also confirmed that it has kept the repo rate unchanged at 5.25%.

Previously, in December 2025, the central bank reduced the repo rate by 25 basis points, bringing it down from 5.5% to 5.25%. This marked the first rate cut since April 2025.

What Repo Rate Stability Means for Consumers

• Loan EMIs may remain stable, with no immediate reduction expected

• Fixed deposit (FD) interest rates may not rise significantly

• A stable repo rate signals confidence in India’s economic strength

Governor Malhotra stated that India’s economic outlook remains strong, supported by positive trends in inflation control and economic growth.

Inflation Outlook and Economic Forecast

RBI projects retail inflation for FY26 at 2.1%, with the January–March 2026 quarter expected to record 3.2% inflation.

Looking ahead:

• Inflation is expected to normalize further in FY27

• April–June 2026 inflation projection: 4.0%

• July–September 2026 projection: 4.2%

The RBI noted that excluding fluctuations in precious metal prices, core inflation is likely to remain within a manageable range.

Why This RBI Announcement Matters

This new compensation policy could mark a major milestone in consumer digital safety, especially as India continues its push toward a cashless economy. The framework is expected to:

• Reduce financial stress for fraud victims

• Force banks and fintech firms to adopt higher security standards

• Improve public trust in UPI, net banking, and digital wallets

• Strengthen India’s overall cyber-financial security ecosystem

With millions of Indians relying on digital payments every day, RBI’s move signals a strong commitment to safeguarding consumer interests.

Key Takeaway for Digital Users

If implemented successfully, RBI’s upcoming framework could ensure that victims of unauthorized digital transactions receive timely and fair compensation, making online payments safer and more reliable.

Consumers are advised to:

• Monitor bank statements regularly

• Report suspicious transactions immediately

• Enable two-factor authentication on banking apps

• Avoid sharing OTPs or personal banking details