Banks reported a total of 18,386 frauds amounting to ₹16,569 crore in H1FY25
| Photo Credit:
The Reserve Bank of India (RBI) said it will help bank customers who have faced digital fraud with an one-time compensation of up to ₹25,000 from the regulator’s depositor education and awareness (DEA) fund.
“It is also proposed to introduce a framework to compensate customers up to an amount of ₹25,000 for loss incurred in small-value fraudulent transactions,” said RBI Governor Sanjay Malhotra, adding that this facility will be provided only one time to a customer so that they become more aware and do not fall for online frauds again.
According to the RBI, banks reported a total of 18,386 frauds amounting to ₹16,569 crore in H1FY25. Online frauds accounted for the maximum volume of frauds, while value-wise frauds related to loans held the most share. The RBI’s DEA fund has ₹85,000 crore of corpus. It will issue a draft circular for public consultation on the subject soon.
Recovery agents
The regulator also said it will review and harmonise all conduct-related instructions on engagement of recovery agents and other aspects related to recovery of loans. Currently, different sets of instructions are applicable to different categories of regulated entities (REs) with respect to the engagement of recovery agents and conduct-related aspects of loan recovery.
The step is necessary as banks, non-banks and more recently digital lending apps often appoint third-party agencies that deploy recovery agents who resort to abusive and non-compliant regulatory practices to recover loans. Some digital lending apps also use messaging apps such as WhatsApp to push a borrower towards loan settlement. In 2022, the RBI had barred M&M Finance from using external agency recovery agents after the infamous Hazaribagh incident. After M&M Finance corrected their processes, the regulator rolled back the restrictions in 2023.
Curbing mis-selling
Further, the RBI said mis-selling financial products and services by lenders has significant consequences for both customers as well as the lending entity, underscoring the need to ensure that third-party products and services sold at bank counters are suitable to customer needs and commensurate with the risk appetite of individual clients.
Accordingly, the RBI has decided to issue comprehensive instructions to REs on advertising, marketing and sale of financial products and services. The draft instructions in this regard shall be issued shortly for public consultation.
Published on February 6, 2026
