RBI to offer ₹25,000 compensation to digital fraud victims, even if OTP shared

Bank customers who fall victim to digital fraud may receive compensation even if they inadvertently share their one-time password (OTP) with fraudsters, Reserve Bank of India (RBI) Governor Sanjay Malhotra said on Saturday.

Speaking to media, Malhotra said affected customers would be eligible for compensation of up to ₹25,000, provided there is no evidence of malicious intent. The compensation will be paid from the ₹85,000-crore Depositor Education and Awareness (DEA) Fund, which includes unclaimed deposits held for more than 10 years.

Officials clarified that compensation under the proposed scheme can be claimed only once in a lifetime. Customers will also be required to bear 15% of the fraud amount themselves, ensuring what the governor described as “skin in the game”. In cases involving higher-value frauds, the compensation will remain capped at ₹25,000.

“As long as they are defrauded — whether due to their own action or otherwise — and the transaction is unintended, ₹25,000 will be paid,” Malhotra said, adding that the framework aims to provide relief to individuals who lose money despite acting without malicious intent.

RBI officials noted that although the overall monetary value of digital fraud cases remains relatively small, nearly two-thirds of such incidents involve amounts below ₹50,000, meaning a large number of victims are likely to benefit from the proposed facility.

Deputy Governor Swaminathan J said the scheme is designed primarily to protect individuals who unknowingly become victims of fraud, adding that the financial burden on the fund is expected to remain limited.

Malhotra said a draft of the compensation framework will soon be released for public consultation. He also announced that the RBI is working on additional safety measures to curb fraud, including delayed credit to beneficiary accounts and enhanced authentication systems, particularly to safeguard senior citizens.

Separately, Deputy Governor Shirish Murmu said an awareness campaign encouraging depositors to claim long-unclaimed funds has increased the rate of withdrawals to around ₹5,000 crore annually.