Reserve Bank of India (RBI) has introduced a new framework to protect customers from small-value fraudulent transactions, ensuring enhanced digital payment safety and boosting confidence in banking services.
Reserve Bank Governor Sanjay Malhotra unveiled a new framework to reimburse clients for losses resulting from small-value fraudulent transactions up to ₹25,000.
RBI’s New Customer Compensation Framework
Mr. Malhotra announced the final bimonthly policy for the current fiscal year, saying, “We will also publish a discussion paper on possible measures to increase the safety of digital payments.” Lagged credits and extra authentication for particular user classes, such as senior people, are examples of such approaches.
He added that the RBI will release three draft recommendations for customer protection. “It is also recommended to develop a framework to compensate customers up to an amount of ₹25,000 for loss sustained in small-value fraudulent transactions,” he said three on restricting client liability in unauthorized electronic banking activities; two on loan recovery and employing recovery agents; and one on mis-selling.
Review of Existing Guidelines
The current guidelines for limiting a customer’s liability in unapproved electronic banking transactions were released in 2017. They cover scenarios and deadlines for a customer’s zero or restricted liability.
The current guidelines have been reviewed since they were issued, he noted, due to the quick adoption of technology in the banking industry and payment systems.
💰 RBI Fraud Compensation Scheme
- Coverage: Up to ₹25,000 for small-value fraudulent transactions
- Beneficiaries: All customers affected, focus on senior citizens
- Draft Guidelines: To be issued for public consultation soon
- Objective: Increase digital payment safety and customer protection
Updated Draft Instructions
In light of this, he stated that the updated draft instructions, which will include a compensation structure for fraudulent transactions of modest value, will be made available for public review soon.
According to Malhotra, there is a perceived need to ensure that third-party goods and services offered at bank counters are suitable for client demands and in line with each client’s risk tolerance.
Guidelines on Mis-Selling and Loan Recovery
It has been agreed to provide REs with thorough guidelines on financial product and service promotion, marketing, and sales since misselling financial products and services by any regulated entity has serious repercussions for both clients and such entities. He said the public would soon be able to comment on proposed rules in this area.
He added that different kinds of REs are subject to distinct sets of guidelines on the use of recovery agents and the current state of loan recovery-related activities.
According to him, it has now been determined to examine and harmonize all current conduct-related guidelines on the hiring of recovery agents and other debt recovery-related matters.
The RBI Governor stated that the draft guidelines in this area will soon be made available for public review.
🏦 Mission SAKSHAM for UCBs
- Objective: Capacity building & certification for Urban Cooperative Banks
- Reach: ~1.40 lakh participants across functions
- Training: Physical programs + scalable learning platform
- Languages: Regional language support where feasible
- Collaboration: National/state federations & UCB umbrella organization
Mission SAKSHAM: Enhancing Urban Cooperative Banks
The governor of the RBI stated that the goal of Mission Saksham is to increase the capability of Urban Cooperative Banks.
He emphasized that the Primary (Urban) Co-operative Banks (UCBs) are essential organizations for fostering financial inclusion and helping the unbanked, and that ensuring their next stage of expansion would require strengthening their operational resilience, technical capabilities, and skill sets.
He stated that the Reserve Bank will shortly introduce Mission SAKSHAM (Sahakari Bank Kshamta Nirman), a framework for sector-wide capacity-building and certification, in order to achieve this goal.
According to him, a scalable learning platform and many in-person training programs will be used to develop the sector’s capacity, reaching roughly 1.40 lakh people across all functions.
According to him, the Reserve Bank would make an effort to hold these training sessions near participating UCBs, delivering the material in regional languages if possible.
National/state federations and the umbrella organization of UCBs will collaborate to further the mission.
Frequently Asked Questions
1. What is the RBI’s new remuneration structure?
The RBI has put forth a plan to reimburse consumers up to ₹25,000 for damages resulting from fraudulent small-value electronic banking transactions.
2. To whom will this framework be advantageous?
Consumers impacted by illegal or unauthorized online transactions will be qualified. The program specifically seeks to safeguard vulnerable populations, such as the elderly.
3. Are there any more steps to improve the security of digital payments?
Yes, RBI intends to publish draft guidelines on mis-selling, loan recovery, and minimizing customer liability, as well as a discussion paper on policies including lagged credits and extra authentication for certain users.
4. What is SAKSHAM Mission?
Mission SAKSHAM (Sahakari Bank Kshamta Nirman) is a certification and capacity-building initiative for Urban Cooperative Banks (UCBs) to enhance the technical proficiency, operational resilience, and skills of their employees.
5. When will these rules go into effect?
The framework for customer compensation, loan recovery, and other regulatory actions will be finalized when RBI releases draft guidelines for public comment.
Conclusion
The RBI’s latest initiatives seek to improve digital payment security, bolster client protection, and increase cooperative banks’ capabilities. It aims to protect consumers from small-value frauds with the ₹25,000 compensation structure, and Mission SAKSHAM will increase the effectiveness and resilience of Urban Cooperative Banks.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always consult official RBI notifications before taking action.
