With digital fraud cases rising alongside rapid UPI adoption, the Reserve Bank of India (RBI) is looking to introduce additional safety layers without significantly compromising user convenience. The central
bank has released a discussion paper outlining measures to make digital payments not just faster, but also more secure. It has invited public comments on the proposals until May 8, after which it will review the feedback and consider issuing draft guidelines.
Fraud on the rise
The urgency behind these proposals reflects the sharp increase in digital payment frauds in India. As UPI and online transactions have surged, so have scams involving phishing links, fake customer care calls, mule accounts, and even AI-led impersonation. Fraudsters are increasingly exploiting the instant nature of digital payments, where funds—once transferred—are often difficult to recover.
Here’s a sharper look at the five key proposals:
1. Cooling-off period for high-value transfers
RBI has proposed introducing a short delay for large transactions to allow users time to flag or reverse suspicious payments.
The central bank has suggested a one-hour delay for digital transfers above Rs 10,000 before funds are credited to the beneficiary’s account—adding a crucial buffer against fraud.
2. ‘Trusted person’ check for vulnerable users
For senior citizens and high-risk users, RBI has proposed an additional layer of authentication through a nominated “trusted person.”
The paper notes that individuals above 70 years of age or those differently abled may be more vulnerable to socially engineered frauds. For such users, transactions above Rs 50,000 could require approval from a trusted contact.
This safeguard is particularly relevant as nearly 92 percent of the value of reported frauds falls above this threshold.
To prevent misuse, any change in the trusted person would require a 24-hour cooling-off period. Similarly, opting out of the system would also be subject to a 24-hour delay, with banks required to inform customers of the associated risks.
3. Emergency ‘kill switch’
RBI has proposed a unified “kill switch” that would allow users to instantly disable all digital payment modes linked to their account.
Customers would also be able to set transaction limits across channels, similar to controls available for card payments.
Reactivating payments after triggering the kill switch would require strong authentication or even a physical visit to a bank branch, ensuring tighter security.
The regulator is also examining whether digital payment access should be disabled by default for new customers unless explicitly activated.
4. Risk-based transaction controls
To curb the misuse of bank accounts as conduits for fraud, the RBI has proposed aligning permissible credit limits with a customer’s verified financial profile under KYC norms.
Accounts without enhanced due diligence may face an annual inflow cap of around Rs 25 lakh. Any credit beyond this limit could be temporarily held (“shadow mode”) and released only after verification, or reversed if deemed suspicious.
This approach aims to tighten oversight of fund flows while minimising disruption for genuine users.
5. Real-time fraud detection systems
RBI is also pushing banks and payment players to strengthen backend monitoring systems.
This includes deploying fraud risk indicators and AI-driven tools to detect unusual transaction patterns in real time and prevent losses before they occur.
What it means for users
For users, these measures act as critical safety nets in an increasingly risky digital ecosystem. A short delay in high-value transactions can prevent irreversible mistakes, while features like a kill switch and trusted contact approval provide immediate protection in case of suspected fraud.
At the same time, risk-based checks and smarter monitoring ensure that routine transactions remain seamless, with additional friction introduced only where the risk is higher.
In essence, RBI’s approach signals a shift—making digital payments not just faster, but significantly safer.
