Fraud Alert: Will the money lost to fraud now be recovered? The RBI is making big plans to curb fraudsters..
RBI banking fraud: Banking and digital frauds are constantly increasing in India, and as a result, ordinary people's earnings are being siphoned off in a matter of minutes. Now, information has emerged that the RBI is working on a model that could completely transform banking security. According to sources, this model may slow down the transaction process, but security will be significantly enhanced, and money lost in fraud can be recovered much faster than before.
This move has gained further momentum following the Supreme Court's recent observation, which stated that people face a lot of struggle to recover their money after fraud and that a system for prompt refunds should be developed.
Will the new system operate with customer consent?
The most significant feature of the proposed new model is that when sending money, the customer will be given the power to decide how quickly the receiver can use the funds. When transferring money to an account, the bank will ask for additional consent, specifying whether the funds can be used within the next hour.
If the customer authorizes, the funds will be functional within an hour. However, if the customer refuses, the funds will remain "frozen" in the system for 24 hours, preventing ATM withdrawals or digital transfers. This system aims to prevent fraudsters from immediately withdrawing funds.
Fraudulent funds will remain stuck in the system for 24 hours.
Previously, after a fraud occurs, criminals transfer funds to multiple accounts, withdraw them from ATMs, or deposit them in digital wallets within minutes, making it difficult to trace. However, in the new model, since the funds will remain frozen in the system for 24 hours, banks and cyber cells will have sufficient time to immediately alert and freeze the accounts. The biggest advantage of this will be that the customer's lost funds will be recovered in a "possible" manner, not "impossible." This is why many experts consider this the biggest fraud-prevention model in India's history.
RBI's efforts accelerate after the Supreme Court's displeasure
The Supreme Court recently pointed out to the RBI that while people are being advised to be vigilant—such as not sharing OTPs and not clicking on links—frauds continue to occur, and people are unable to get their money back. The court strongly stated that the RBI must develop a system that allows people to get their money back immediately and avoid the hassle of searching for it. Following this, the RBI Governor acknowledged in a press conference that work is underway on a new system, which could be unveiled soon.
Transactions will be slightly slower
The new system may pause transactions for a short period of time, rather than a few seconds or minutes, but experts say this delay will be a significant safeguard for customer safety. This will not only freeze funds in case of erroneous transfers, but also give banks time to take immediate action in cases of fraud. This model will transform digital banking from "speed-focused" to "security-focused," making the Indian banking system more secure and reliable.
When could the new system be implemented?
This system is currently under consideration, but given the RBI's activeness and the Supreme Court's displeasure, it's expected that a major decision will be made in the coming months. If this model is implemented, the risk of fraud in digital transactions could be reduced by 70–80%, and money lost in fraud could be recovered very quickly—possibly within hours. This could prove to be the biggest reform in Indian banking history.
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