RBI’s plan to compensate victims of fraud transactions, Pg12

Key Highlights:

• The RBI plans to introduce a framework to compensate victims of fraudulent, small-value transactions, as announced on February 6.
• Financial fraud complaints on the National Cyber Crime Reporting Portal increased by 25% in 2025, reaching 24.03 lakh.
• Compensation will be capped at Rs 25,000 or 85% of the fraud value, whichever is lower, with the defrauded person bearing at least 15% of the loss.
• The RBI will cover 70% of the defrauded amount, while banks will provide the remaining 15%.

Detailed Insights:

• The framework will extend relief even to those who shared their One-Time Password (OTP) with fraudsters, a departure from current practices.
• The compensation scheme will be a "no questions asked" and a one-time measure, limiting repeated compensation for recurring victims.
• In 2024-25, there were 12.64 lakh UPI fraud incidents involving Rs 981 crore, a decrease from the previous year, but 2025-26 is projected to be worse.
• The first eight months of 2025-26 saw 10.64 lakh UPI frauds worth Rs 805 crore, potentially rising to almost 16 lakh cases involving over Rs 1,200 crore by year-end.
• Payment-related fraud cases reported by banks and non-bank issuers surged by 42% in 2023-24 to 28.22 lakh, with the total amount involved up by 74% at Rs 4,403 crore.

Key Concepts Involved:

• RBI: India's central bank, responsible for regulating the banking system and monetary policy.
• UPI: Unified Payment Interface, a real-time payment system for instant fund transfers.
• OTP: One-Time Password, a security code used to authorize online transactions.