In a major move to strengthen consumer protection in the banking sector, the Reserve Bank of India (RBI) has announced a framework to compensate customers for losses arising from small-value fraudulent transactions. Under the new guidelines, affected customers can receive compensation up to ₹25,000, ensuring added security and confidence in digital banking.
The announcement comes in the wake of the 59th Monetary Policy Committee (MPC) meeting, held from February 4 to 6, 2026, under the leadership of RBI Governor Sanjay Malhotra. While the MPC decided to keep the policy repo rate unchanged at 5.25%, it also focused on enhancing customer protection in the evolving financial ecosystem.
This initiative aims to safeguard account holders from the growing number of small-scale frauds that have surfaced with the rise of online banking and digital payments. Banks will now have clear responsibilities to promptly compensate victims, helping restore trust in the financial system.
Experts believe that this step not only provides immediate relief to customers but also encourages banks to strengthen internal security measures and fraud detection systems. The cap of ₹25,000 is intended to cover small-value frauds, which are more common and often difficult for individuals to recover on their own.
With digital payments becoming increasingly integral to everyday life, RBI’s proactive approach is a boost for consumer confidence, reassuring users that their hard-earned money is protected even in the face of cyber threats and fraudulent transactions.
This new framework is expected to set a benchmark in banking consumer rights, aligning India with global best practices for fraud compensation while supporting a safe and robust digital economy.