RBI Finalizes Procedure for Rs 25,000 Cyber Fraud Compensation Scheme
In a significant move to bolster digital financial security, the Reserve Bank of India (RBI) is actively formulating a streamlined and hassle-free procedure to roll out its recently announced Rs 25,000 cyber fraud compensation scheme. This initiative, unveiled during the central bank's monetary policy announcement earlier this month, aims to establish a seamless reimbursement mechanism for victims of online financial crimes.
Public Input and Draft Guidelines
Top sources within the apex bank revealed on Monday that the RBI is conducting an extensive study of public inputs to shape this compensation framework. The bank plans to issue draft guidelines shortly to solicit opinions from various stakeholders, including citizens. These guidelines will help refine the final blueprint, which will specify the upper limit of monetary loss required to trigger the compensation clause.
According to an internal assessment by the RBI, approximately 65% of cyber fraud cases involve relatively small amounts, highlighting the need for a targeted compensation approach. As per the initial announcement, victims will be eligible to receive either 85% of their lost amount or Rs 25,000, whichever is lower. However, they will be required to bear 15% of the loss themselves, a measure termed as "skin in the game" to encourage vigilance among users.
Funding Through Unclaimed Deposits
The RBI has identified a sustainable funding source for this compensation scheme: the interest earned from unclaimed deposits held in banks across the country. A substantial portion of these deposits remains idle in various branches, and sources indicate that these funds are more than sufficient to cover the compensation payouts.
Even as the RBI continues its drive to return unclaimed deposits to rightful owners, there are ample resources left to compensate cyber fraud victims. These unclaimed deposits, from accounts that have been inoperative for ten years or more, contribute to the Depositor' Education and Awareness Fund, which will now also support this new compensation initiative.
Holistic Approach to Cyber Fraud
The RBI is adopting a comprehensive strategy to tackle cyber fraud, with compensation being just one facet of its broader efforts. The bank is equally focused on preventing fraud within the financial system. Regular training sessions are being conducted in collaboration with law enforcement agencies to enhance detection and response capabilities.
It has been observed that credit card systems in India are relatively secure due to a time lag in transaction processing, which often allows for intervention before charges are finalized. In contrast, frauds involving Unified Payments Interface (UPI) or net banking can result in rapid financial losses, as funds are transferred almost instantaneously.
Promoting Financial Inclusion and Literacy
Alongside these security measures, the RBI remains committed to advancing financial inclusion by facilitating bank account openings in the remotest areas of the country. The bank recently launched a financial literacy week to educate the public on safe banking practices, further reinforcing its dual focus on accessibility and security in the digital age.
