Address causes, not symptoms: Industry warns RBI’s new anti-fraud proposals are insufficient and disruptive

Subscribe to enjoy similar stories.Recent proposals by the Reserve Bank of India to curb digital fraud could disrupt payments and hurt small merchants’ cash flows while proving insufficient to combat the growing problem, several industry experts told Mint.In a discussion paper floated on 9 April, the RBI proposed introducing a one-hour lag at the payer’s end for transactions above ₹10,000. Other suggestions included:Industry leaders said the RBI's current ‘safety net’ approach addresses the symptoms rather than the cause.

Abhinav Parashar, co-founder and CEO of Digio, said. “Time delays and trusted persons are purely downstream safety nets; they only trigger after a victim has already been manipulated.

While these are vital circuit breakers, the most feasible long-term solution is upstream intervention.”Echoing this sentiment, Rohit Mahajan, founder and CEO of Plutos ONE, emphasized that the nature of these crimes makes blanket rules problematic. “Application of security measures should be proportional so that the least risky transactions are frictionless for users, whereas the most risky transactions have the strictest level of security.” Mahajan noted that since most fraud is driven by social engineering rather than technical system failures, crimes rely on exploiting human behavior rather than gaps in infrastructure.This leads to concerns over ‘friction’—the industry term for any step that slows down a user.

“A blanket delay on payments above a certain threshold risks disrupting the core value proposition,” said Eshita Singh, head of payments propositions at IDfy. Introducing such delays could impact liquidity for small merchants in the unorganised sector, such as local garages or second-hand sellers, who typically