The Reserve Bank of India (RBI) has released a comprehensive discussion paper proposing several high-impact safeguards to curb the rising tide of digital payment frauds in the country. Aiming to enhance the security of the payment ecosystem, the central bank has invited stakeholders and the general public to submit their comments and feedback on these proposals through the 'Connect 2 Regulate' link on its website by May 8, 2026.

The move comes as India witnesses a massive structural shift toward digital finance, with transaction volumes growing 38-fold over the last decade. However, this growth has been accompanied by a sharp rise in "Authorised Push-Payment" (APP) frauds, where victims are manipulated through social engineering to initiate transactions themselves.

According to the sources, reported fraud values surged from ₹551 crore in 2021 to a staggering ₹22,931 crore in 2025.

Key Proposals to Enhance Security

The RBI discussion paper outlines four primary options to provide extra layers of protection for Indian consumers:

1. One-Hour "Lag" for High-Value Transfers: To disrupt the psychological pressure often applied by fraudsters, the RBI suggests introducing a mandatory one-hour time lag for account-to-account transfers exceeding ₹10,000. This "golden hour" would allow payers to cancel a transaction if they realize they are being duped. The lag would apply to individuals, sole proprietors, and partnership firms, though merchant payments and recurring mandates would be exempted.

2. "Trusted Person" Authentication for Vulnerable Citizens: Recognizing that senior citizens and persons with disabilities are frequent targets of impersonation scams, the paper proposes a mandatory "trusted person" safeguard. For transactions above ₹50,000 initiated by citizens aged 70 and above or persons with disabilities, an independent trusted individual would need to provide an additional layer of authentication.

3. Ceiling on Annual Credits to Curb "Mule" Accounts: To tackle the use of "mule" accounts for routing fraudulent proceeds, the RBI proposes a regulatory ceiling of ₹25 lakh on annual aggregate credits for accounts that have not undergone an additional review of their business relationship. If an account exceeds this limit, incoming funds would be held as "shadow credit" and only released after the bank verifies the genuineness of the transaction.

4. Universal "Kill-Switch" for Digital Access: The paper suggests empowering customers with a single "kill-switch" facility to instantly disable all digital payment channels -- including UPI, cards, and net banking -- in case of suspected unauthorized activity. Reactivating these services would require stringent verification or a physical visit to a bank branch.

While these measures aim to reassure users and maintain trust in the digital ecosystem, the RBI acknowledged potential challenges, such as increased costs for banks and a possible conflict with the "immediacy" of digital payments.

Following the May 8 deadline, the RBI will analyze the feedback received before considering the issuance of formal draft guidelines. Stakeholders are encouraged to weigh in on whether these thresholds adequately balance fraud mitigation with customer convenience.