The move aims to strengthen customer protection amid the rapid expansion of digital banking and payment systems across the country. Malhotra said the central bank would soon release revised draft instructions for public consultation, including the proposed compensation framework.

As part of the initiative, the RBI will publish a discussion paper outlining measures to enhance the safety and security of digital payments. These may include lagged credit mechanisms and additional layers of authentication for select categories of users, particularly senior citizens, who are often more vulnerable to online fraud.

The proposed compensation framework builds on existing RBI instructions issued in 2017, which define conditions under which customers bear zero or limited liability for unauthorised electronic banking transactions, depending on reporting timelines and circumstances. Malhotra said these norms have been reviewed to reflect technological changes and evolving fraud patterns.

In addition to digital fraud protection, the RBI plans to issue three draft guidelines to further bolster customer rights. These will address mis-selling of financial products, recovery of loans and engagement of recovery agents, and revised limits on customer liability in unauthorised electronic banking transactions. All three drafts will be released for public feedback.

Flagging concerns over mis-selling, the RBI governor said improper sale of financial products by regulated entities can have serious consequences for both customers and institutions. He stressed the need to ensure that third-party products offered at bank branches are suitable for customers and aligned with their risk profiles. Comprehensive instructions on advertising, marketing and sales practices are expected to follow.

The central bank also announced plans to review and harmonise existing conduct-related instructions governing loan recovery and the use of recovery agents. Currently, different norms apply to various categories of regulated entities, leading to inconsistencies in implementation. Draft guidelines on this issue will also be placed in the public domain.

Separately, Malhotra announced the launch of Mission SAKSHAM, a capacity-building initiative for urban cooperative banks. The programme aims to strengthen skills, technical capabilities and operational resilience across the sector. About 1.4 lakh participants are expected to be covered through a mix of in-person training and digital learning platforms, with content delivered in regional languages where feasible.

Officials said the proposed measures signal a broader push by the RBI to balance digital innovation with stronger consumer safeguards and institutional accountability.