As digital payments continue to expand across India, regulators are increasingly focused on strengthening consumer protection against financial fraud. The Reserve Bank of India (RBI) has released a discussion paper outlining a series of measures aimed at reducing fraud in digital transactions. The proposals include introducing delays for certain transfers, adding additional verification steps for high-value transactions, limiting suspicious accounts, and giving customers greater control over their payment channels. The central bank has invited feedback on the proposals until May 8, 2026.
Proposed Cooling-Off Period for Fund Transfers
One of the most significant proposals is the introduction of a one-hour cooling-off period for account-to-account transfers exceeding ₹10,000. This rule would apply to individuals, sole proprietors, and partnership firms.
Currently, these transfers are processed instantly and typically cannot be reversed if they are part of fraudulent activity. The proposed delay would create a short window in which suspicious transactions could potentially be identified and stopped before funds are fully transferred.
The RBI has indicated that this delay could be applied either at the sending bank, the receiving bank, or both, depending on how institutions implement the safeguard.
The ₹10,000 threshold was chosen because these transfers represent a large share of fraud activity. Data from India’s National Cyber Crime Reporting Portal shows that such transactions account for roughly 45% of fraud incidents by number and nearly 98.5% of the value involved.
Additional Verification for High-Value Transactions
The discussion paper also highlights the need for additional protection for vulnerable users, including senior citizens and individuals with disabilities.
For digital transactions exceeding ₹50,000, the RBI has suggested introducing an extra verification layer. This could involve confirming the transaction with a trusted person nominated by the account holder, providing an additional safeguard against impersonation or social engineering scams.
Fraud data suggests that a significant proportion of financial losses occur in higher-value transactions. Around 92% of fraud losses by value occur in transactions above ₹50,000, often driven by sophisticated fraud tactics such as fake customer service calls or identity impersonation.
Giving Customers Greater Control Over Payments
Another key aspect of the RBI’s proposal focuses on empowering users to manage their digital payment activity more directly.
Banks may be required to allow customers to:
- Enable or disable specific payment channels
- Set personalised transaction limits
- Activate an emergency “kill switch” to stop all digital payments instantly
The emergency blocking feature could be made available through several channels including mobile banking apps, internet banking portals, bank branches, and IVR systems. This would allow customers to quickly freeze transactions if they suspect fraudulent activity on their accounts.
Targeting the Use of Mule Accounts
The RBI is also addressing the growing misuse of so-called mule accounts, which are often used by fraud networks to move stolen funds.
Under the proposed framework, accounts that have not undergone enhanced due diligence may face a limit of ₹25 lakh in annual incoming transfers. Accounts that require higher limits would need to provide additional verification related to business activities or the source of funds.
This measure is designed to prevent criminals from exploiting newly opened or lightly verified accounts to funnel illicit funds through the banking system.
Rising Digital Payments and Fraud Risks
The regulator’s proposals come amid a rapid increase in digital transactions across India. Over the past decade, digital payments have expanded at an annual growth rate of approximately 53%, driven by the widespread adoption of mobile payments, real-time transfer systems, and digital banking platforms.
However, this growth has also been accompanied by a sharp rise in fraud incidents. Reported cases increased from roughly 260,000 in 2021 to around 2.8 million in 2025, while the total value involved surged from about ₹551 crore to nearly ₹22,931 crore.
Fraud methods have also become more sophisticated, with criminals increasingly using techniques such as deepfake voice scams, fake call centres, and organised networks of mule accounts to deceive victims.
What This Means for the Industry
- Regulators are moving toward stronger safeguards in real-time payment systems to reduce the growing threat of digital fraud.
- Additional verification requirements may slow certain transactions but could significantly improve protection for vulnerable users.
- Banks will likely need to upgrade fraud detection systems and customer controls to comply with the proposed framework.
- As digital payment volumes continue to rise, balancing transaction speed with security will remain a key challenge for financial institutions.
