RBI DG T. Rabi Sankar flags need for faster fraud resolution, upfront customer reimbursement

Reserve Bank of India

The Reserve Bank of India's (RBI) Deputy Governor T. Rabi Sankar on January 9 flagged the need to re-examine how banks handle customer complaints related to fraud, saying India could consider systems followed in other jurisdictions where customers are compensated upfront once a fraud is reported.

“You see, in many countries, in many jurisdictions, you report a fraud, the first thing the bank does is pays you. It settles the fraud separately,” Sankar said while addressing at Indian Banks' Association conference in Mumbai.

He said India could explore a similar approach, possibly with safeguards such as thresholds and well-defined conditions, to ensure that victims of fraud are not left waiting for long periods while investigations play out.

“Can we try and go for such a system? Maybe with certain thresholds,” the RBI deputy governor said, adding that while technology has significantly improved fraud detection and monitoring, it must be backed by robust institutional processes.

Sankar stressed that technology alone cannot address the problem of fraud, especially as digital transactions continue to scale rapidly.

“Technology itself will enable all of us, but we have to have systems that follow up effectively in every aspect,” he said.

Further, he said that fraud in the payment systems, the numbers have been going down. It used to be quite high for cards, but I've seen that trend also going in a positive direction. The numbers are coming down.