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RBI Proposes ₹25,000 Compensation Framework for Small-Value Digital Frauds Covering 65% of Cases

EconomyPolityCORE
Target:UPSCMPSCBankingSSC GATeachingPrelims HighMains MediumStatic GK Link
06 Feb 2026
~2 min
Source: Indian Express
Key Data:₹25,000 per case65 per cent of frauds involve amounts less than Rs 50,00085 per cent of loss amount70 per cent of loss amount
Bodies:RBI
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What This Article Covers

1.RBI Governor Sanjay Malhotra announced a draft framework to compensate customers up to Rs 25,000 per case for small-value fraudulent digital transactions.

2.Compensation of up to 85% of the loss (or Rs 25,000) will be provided from the Deposit Education and Awareness Fund, even if the customer shared the OTP, and can be availed once in a lifetime.

3.This news tests the aspirant's understanding of RBI's consumer protection role, the source of funds for such schemes, and the balance between user negligence and systemic responsibility.

The Big Picture
Prelims · HighMains · Medium

The RBI has proposed a customer-centric framework to compensate victims of small-value digital frauds up to Rs 25,000, even in cases where the victim inadvertently shared the OTP. This move aims to bolster trust in digital payments and protect vulnerable users, addressing a significant pain point where 65% of frauds involve amounts below Rs 50,000. For exam aspirants, this is a critical update on financial inclusion, consumer protection, and the evolving role of a regulator.

Exam Lens

Quick Exam Facts From News

Compensation CapRs 25,000 per case
Frauds < Rs 50,00065% of total digital frauds
Funding SourceDeposit Education and Awareness Fund
Announced byRBI Governor Sanjay Malhotra

1-Minute Revision

  • ›Compensation Cap: Rs 25,000 per case
  • ›Frauds < Rs 50,000: 65% of total digital frauds
  • ›Target this Data: Compensation cap of Rs 25,000 and that 65% of frauds involve amounts less than Rs 50,000.
  • ›Target this Nodal Body: The Reserve Bank of India (RBI) and the specific fund used - Deposit Education and Awareness Fund (DEAF).
  • ›Target this Legal Point: The framework is proposed under the RBI's powers for banking regulation and customer protection; no specific Act is named yet as it's a draft guideline.

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Practice exam-style questions, track your score, and strengthen your recall.

Q1Static LinkageEasy

The proposed compensation framework for digital frauds will be funded from which of the following funds managed by the RBI?

Q2Statement-basedHard

Consider the following statements regarding the RBI's proposed compensation framework for digital frauds:

1. It proposes to compensate customers up to Rs 50,000 per case of fraudulent transaction.

2. Customers will be eligible for compensation even if they have shared the One-Time Password (OTP).

3. The compensation will be paid entirely by the bank involved in the transaction.

Q3Data-centricMedium

As per the news, what percentage of digital fraud cases involve amounts less than Rs 50,000?

Q4Application/ImpactMedium

What is the primary objective behind the RBI's proposal to compensate victims of digital fraud even if they shared the OTP?

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