The RBI’s statement on developmental and regulatory policies includes several important proposals to enhance customer protection. These include proposed compensation for small-value fraudulent transactions, for which a legal and procedural framework will be developed.
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UPI transaction rules: The trend of transactions through the popular Unified Payments Interface (UPI) is continuously gaining momentum. The government had told the Rajya Sabha on Tuesday that a record Rs 230 lakh crore worth of transactions have taken place through UPI till December in the current financial year 2025-26. However, incidents of fraud in UPI payments are also increasing. In such a situation, the Reserve Bank of India (RBI) has proposed to compensate the common people if they become victims of UPI fraud. RBI Governor Sanjay Malhotra gave this information in a statement issued after the latest monetary policy review.
How much compensation will be provided for fraudulent transactions?
The RBI has proposed introducing a framework to compensate customers up to ₹25,000 for losses incurred due to fraudulent small-value UPI transactions. The primary objective of this initiative is to strengthen customer protection and reduce their risk of unauthorized digital transactions.
A Constellation Paper will be issued to determine the compensation structure.
The current guidelines limiting customer liability for unauthorized electronic banking transactions were issued in 2017. Due to the rapid adoption of technology in the banking sector and payment systems, these guidelines have been reviewed. A draft of the revised guidelines, including the proposed compensation structure, will soon be released for consultation. Members of the public and experts will be able to provide their views on how the compensation amount should be determined.
These measures are also being considered to prevent UPI fraud.
In addition, the RBI will publish a discussion paper to enhance the security of digital payments. It may consider security measures such as additional authentication and lagged credits for certain categories of users, such as senior citizens. The Governor also clarified that three draft guidelines will be issued for customer protection, addressing mis-selling, appointment of loan recovery agents, and limiting customer liability for unauthorized transactions.
UPI’s popularity is growing
It should be noted that UPI has become very popular and its usage is constantly increasing. Minister of State for Finance Pankaj Chaudhary told the Rajya Sabha that a record ₹230 lakh crore worth of UPI transactions took place between April and December 2025. He said, “In terms of domestic transactions, a total of ₹230 lakh crore worth of transactions have been made in the year 2025-26 till December, compared to ₹139 lakh crore in 2022-23.”
Nearly half of the world’s real-time transactions are through UPI.
Chaudhary also informed that UPI is now expanding outside India and is being used in eight countries, after currency conversion, while complying with the domestic laws of the respective countries. Finance Minister Nirmala Sitharaman stated in a written reply that UPI transactions are currently taking place in eight countries—Bhutan, France, Mauritius, Nepal, Qatar, Singapore, Sri Lanka, and the United Arab Emirates. Sitharaman also said that according to the ACI Worldwide 2024 report, UPI accounts for approximately 49 percent of total global real-time retail payment transactions.
