RBI MPC 2026: Central bank announces up to ₹25,000 compensation for fraudulent transactions; details inside

The Reserve Bank of India’s Monetary Policy Committee (MPC) announced on Friday, February 6, a compensation of up to ₹25,000 for fraudulent transactions.

RBI Governor Sanjay Malhotra said that the RBI will introduce a framework to compensate customers up to an amount of ₹25,000 for losses incurred in small-value fraudulent transactions.

Further, the Governor said that the RBI will publish a discussion paper on measures to enhance the safety of digital payments, such as additional authentication.

"We will also publish a discussion paper on possible measures to enhance the safety of digital payments. Such measures may include lagged credits and additional authentication for a specific class of users, like senior citizens," Governor Malhotra said in his address on Friday. 

Draft guidelines

For customer protection, Governor Malhotra said that the RBI will issue three draft guidelines regarding:

1. Mis-selling
2. Recovery of loans and engagement of recovery agents
3. Limiting the liability of customers in unauthorised electronic banking transactions

"It is also proposed to introduce a framework to compensate customers up to an amount of ₹25000 for loss incurred in small-value fraudulent transactions," he said.

The RBI had issued instructions on limiting the liability of customers in unauthorised electronic banking transactions in 2017, listing scenarios and timelines for zero/limited liability of a customer.

In view of the rapid adoption of technology in the banking sector and payments systems, since the issuance of these instructions, the existing instructions have been reviewed, Governor Malhotra said.

He added that the draft revised instructions and the framework for compensation in case of small-value fraudulent transactions will be issued soon for public consultation.

Highlighting the significant consequences of mis-selling financial products and services by any regulated entities, Malhotra said that it's important to ensure that third-party products and services sold by banks are suitable for customer needs and their risk appetite.

"It has therefore been decided to issue comprehensive instructions to REs on advertising, marketing and sales of financial products and services. Draft instructions in this regard would be issued shortly for public consultation," he said.

He also said that different sets of instructions are applicable to different categories of REs regarding the engagement of recovery agents and conduct related aspects of loan recovery currently.

The RBI has now decided to review and harmonise the present conduct-related instructions on engagement of recovery agents and other aspects related to recovery of loans, he noted.

"The RBI’s February MPC strikes a reassuring balance between supporting economic growth and preserving financial stability, aided by benign inflation and stable macroeconomic fundamentals. The emphasis on strengthening customer protection—through enhanced safeguards against mis-selling, clearer recovery practices, and compensation for small-value digital fraud—is a timely intervention that will further reinforce trust in the formal credit system," said Vivek Singh, CEO, Home Credit India.