Mumbai: The Reserve Bank of India (RBI) will introduce a new Limited Liability Framework from January 1, 2027, to strengthen customer protection against digital banking fraud. The new system aims to improve trust in digital payments and reduce the financial burden on victims of online fraud.
RBI Governor Sanjay Malhotra announced the proposal during an interview with DD News.
Compensation of Up to ₹25,000
Under the new framework, customers affected by eligible low-value digital banking frauds may receive compensation of up to ₹25,000. The RBI said the framework recognises that fraud can happen despite existing security measures and therefore provides additional protection to customers.
The move is expected to give digital banking users greater confidence while making online transactions.
Focus on Prevention and Early Detection
Governor Malhotra said RBI’s strategy is not limited to compensating victims. The central bank is also working to prevent fraud before it happens.
According to him, RBI is strengthening supervisory systems with banks, improving risk monitoring and encouraging the early detection of suspicious activities. The goal is to protect customers’ money and ensure safer digital transactions across the banking system.
Awareness Campaigns Continue
RBI is also expanding public awareness about cyber fraud. Campaigns such as Digital Payments Awareness Week and ‘RBI Kehta Hai’ educate people about safe digital banking practices.
These campaigns use television, newspapers, radio and social media to reach customers across urban and rural India.
Cyber Security Remains a Priority
As digital payments continue to grow rapidly, RBI has made cyber security and data privacy key priorities. The central bank is encouraging banks to adopt advanced technologies, including Artificial Intelligence (AI), to improve fraud detection, customer service and operational efficiency while managing cyber risks.
The announcement comes at a time when India is witnessing a sharp rise in digital transactions as well as increasing cases of phishing, online scams and unauthorised transactions. The proposed framework is expected to add another layer of protection and strengthen public confidence in digital banking services.
