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Informist, Friday, Feb. 6, 2026

 

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--RBI Malhotra:Propose framework to limit customer hit in small-ticket fraud 
--RBI Malhotra: On small frauds, customers should learn from their mistakes 
--RBI Malhotra: INR 25,000 compensation to customers for frauds one time only 
--RBI Malhotra: Will compensate each customer for small frauds only once 
--RBI Malhotra: To issue draft guidelines on mis-selling, recovery of loans 
--RBI Malhotra: Mis-selling is not that high across the system 
--RBI Murmu: Will compensate people for frauds for small amounts 
--RBI Malhotra: Mis-selling has been a concern
 

 

NEW DELHI – The Reserve Bank of India will introduce a framework to compensate customers up to INR 25,000 for loss incurred in small-value fraudulent transactions, Governor Sanjay Malhotra said Friday. This framework will be part of the measures the central bank will undertake for customer protection.

 

"It has been our conscious effort that we continue to improve customer centricity, customer experience, and customer delight that all of you, including us, as customers expect from banks, NBFCs (non-banking financial institutions), and the regulated entities," the governor said in the post-policy press conference.

 

Under the framework, Malhotra said, customers can claim protection only once during their lifetime, to ensure the same mistake is not repeated. Want customers to be careful, and course correct, Malhotra said, adding that a particular mistake can be forgiven once.

 

Under the framework, customers will get either 85% of the loss incurred or INR 25,000, whichever is lower, as compensation. Explaining the same, Malhotra said if an individual incurs a loss of INR 20,000, 85% of that would be INR 17,000. This means, the customer will be given a compensation of INR 17,000 as it is lower than INR 25,000.

 

Besides this framework, the central bank will also launch three draft guidelines for customer protection – relating to mis-selling, regarding recovery of loans and engagement of recovery agents, and on limiting liability of customers in unauthorised electronic banking transactions. 

 

Speaking about mis-selling, an issue that has been raised by the government and its regulators multiple times over the last couple of years, the governor Friday reiterated that "this has been a concern." The RBI has now "codified" it, and will issue the draft guidelines accordingly, he said.

 

According to the governor, the issue of mis-selling, though prevalent, is not seen across the system. It is quite low, but even one case is important, and so it is a concern, he said. The draft guidelines will have multiple provisions like identifying dark patterns, and the central bank is hopeful it will help contain the problem further.

 

Mis-selling is the deliberate sale of financial products that are unsuitable for the customer's specific needs, often driven by high commissions. It involves sharing wrong information, failing to disclose risks, or using pressure tactics to convince customers to buy products they do not need or understand.   End

 

Reported by Priyasmita Dutta

Edited by Ashish Shirke

 

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