RBI proposes new rules like kill switch and lagged credit to reduce digital payment fraud

With the rapid growth of digital payments in India, online transactions have become faster and more convenient. People can now send and receive money within seconds using mobile apps, cards, and net banking. However, this ease has also led to a rise in online financial fraud.

To tackle this growing problem, the Reserve Bank of India (RBI) has proposed several new measures. These steps aim to protect users from fraud and give them better control over their money. The RBI has also invited public suggestions on these proposals until May 8, 2026.

These new ideas focus on improving safety in digital transactions, especially in cases where fraudsters try to steal money through scams, hacking, or misuse of bank accounts.

Key proposals to improve transaction safety

One of the most important proposals by the Reserve Bank of India is the introduction of a “kill switch.” This feature would allow users to instantly disable all their digital payment services in case of emergency.

If a person feels that their phone has been hacked or their bank account is at risk, they can activate the kill switch. Once activated, all services like UPI, debit or credit cards, and net banking will stop working immediately. This can help prevent fraudsters from making unauthorized transactions.

To reactivate these services, users may need to go through a strict verification process or visit their bank branch. This ensures that only the real account holder can restore access.

Another major proposal is the idea of “lagged credit.” Under this rule, transactions above Rs 10,000 may not be processed instantly. Instead, there could be a delay of about one hour before the money reaches the receiver’s account.

During this time, the amount will be deducted from the sender’s account, but the sender will still have the option to cancel the transaction. This is useful in case someone realizes they have been tricked into sending money to a fraudster.

Data shows that most financial frauds involve transactions above Rs 10,000. By adding this delay, the RBI hopes to reduce such cases significantly.

The central bank is also considering setting limits on the total amount that can be credited to certain bank accounts. This is mainly to stop the use of “mule accounts,” which are accounts opened using fake or stolen identities for illegal activities.

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Focus on vulnerable users and rising fraud cases

The Reserve Bank of India has also proposed extra safety measures for senior citizens and differently abled individuals. These groups are often targeted by fraudsters because they may not be fully aware of digital risks.

To protect them, the RBI has suggested the concept of a “Trusted Person.” Under this system, users above 70 years of age or those with special needs can choose a trusted individual to help verify large transactions.

Before completing a big transaction, approval from this trusted person may be required. This adds an extra layer of security and reduces the chances of fraud.

These steps have been proposed at a time when digital fraud cases in India are increasing rapidly. According to data from the National Cyber Crime Reporting Portal (NCRP), around 2.8 million fraud cases were reported in 2025 alone. The total financial loss from these cases was about Rs 22,931 crore.

This shows how serious the problem has become. Fraudsters are using new methods every day, such as fake calls, phishing messages, and hacking techniques to trick people into sharing their personal and banking details.

The RBI’s proposals aim to address these issues by making digital systems safer and more user-friendly. By giving users tools like the kill switch and transaction delay, the central bank hopes to reduce losses and build trust in digital payments.

In conclusion, the steps proposed by the Reserve Bank of India are designed to make digital transactions more secure in India.

Features like the kill switch, lagged credit, and trusted person system can help users act quickly in case of fraud and prevent financial loss. At the same time, limits on suspicious accounts can reduce illegal activities.

As digital payments continue to grow, such measures are important to ensure safety and confidence among users. The RBI’s effort to invite public feedback also shows its commitment to making policies that benefit everyone.