RBI Introduces Cyber-Fraud Compensation Scheme

Rising digital payment frauds and low recovery rates prompted the RBI to introduce a cyber-fraud compensation scheme. The measure provides financial protection to victims of small-value unauthorised digital transactions.

RBI Cyber-Fraud Compensation Scheme:

Dimension	Key Details
Nature	Consumer protection measure introduced by the Reserve Bank of India
Objective	Provides financial protection against small-value unauthorised digital transactions and clarifies liability framework
Maximum Compensation	Up to ₹25,000 per case or 85% of loss, whichever is lower
Eligible Channels	Applies to digital fraud via UPI, cards and net banking
Shared Liability	RBI around 70%, banks around 15% and customer around 15%
Funding Source	Potentially funded through RBI’s Depositor Education and Awareness Fund with bank contribution
Eligibility Condition	One-time compensation per individual subject to timely reporting and proof submission
Fraud Pattern	65% of frauds involve amounts below ₹50,000 and account for over two-thirds of cases
Implementation	RBI to issue draft guidelines and banks to provide fast and automatic compensation