Now, hailed as the watershed moment for consumer protection, the Reserve Bank of India has launched a “no-questions-asked” compensation mechanism for the victims of small-value digital scams. Under the proposed rules, victims could be offered ₹25,000 for losses caused by unauthorized electronic transactions, including that suffered due to unintentional sharing of their One-Time Password (OTP) with a fraudster.
The “No Questions Asked” Policy at the heart of this proposal is to streamline grievance procedures for the most frequent forms of digital fraud. RBI Governor Sanjay Malhotra explained that in cases of small-value fraud, which make up nearly 65% of all reported digital fraud cases in India, the regulator does not wish to conduct long-winded investigations into user error.
‘As long as victims are defrauded, either self-defraud or under any condition, no questions will be asked,’ Governor Malhotra said. “We will remit them as long as it is done inadvertently and they have lost the money.”
Key Highlights of the Framework
- Compensation Limit: Victims will receive the lower of 85% of the lost amount or ₹25,000.
- One-Time Benefit: To avoid misuse and to promote vigilance for the future, this compensation can only be received once in a lifetime per account holder.
- Small-Value Targeting: The system is focused on small victim-based losses, meaning there is zero opportunity for fraudulent activity unless the victim is less than ₹50,000.
- Skin In The Game: In order to ensure accountability, the loss will be mutualised (RBI will pay 70-85% and the balance will then be divided between the bank 15% and the person, at the customer 15%).
Where Will the Money Arise From?
It intends to make use of the interest accruing on this fund in order to alleviate the situation so as not to touch on national budget or bank profitability.
Calculations: How much will you get?
Damages, too, are aimed at making sure the victim doesn't get left completely unencumbered after a 'lack of thought':
| Amount Lost | 85% of Loss | Max Compensation | Actual Payout |
| ₹10,000 | ₹8,500 | ₹25,000 | ₹8,500 |
| ₹20,000 | ₹17,000 | ₹25,000 | ₹17,000 |
| ₹50,000 | ₹42,500 | ₹25,000 | ₹25,000 |
| ₹1,00,000 | ₹85,000 | ₹25,000 | ₹25,000 |
Broader Digital Safety Measures
In conjunction with the compensation, the RBI is developing several "proactive" tools to curb fraud before it gets to market:
- Lagged Credit: A quick deferral of the due in credit to a new beneficiary for vetting.
- Senior Citizen Protection: More verification for age groups that are at risk.
- MuleHunter.ai: A new AI-enabled system to find and freeze mule accounts syndicates use to park stolen money.
The first draft guidelines in the scheme are slated for public access within weeks.
