Indians lost $25bn to digital fraud in 2025 - now its central bank is fighting back

April 30, BBC - In February, Alok (name changed), a business analyst based in the western Indian city of Pune, got a text message asking him to pay 1,000 rupees ($10.75; £7.9) as a speeding fine.

The message asked him to settle the amount quickly to avoid his driving licence being suspended, prompting Alok to promptly click on the link to pay. He was asked to share an OTP (one-time password) to complete the payment.

Minutes later, his credit card was charged $3,225, the maximum transaction limit.

Alok had inadvertently authorised a much larger sum than what was supposed to be the fine, falling prey to a common scam in India where fraudsters send fake messages mimicking official websites that direct unsuspecting individuals to phishing links and drain their bank accounts.

Experts call this a type of fraud "social engineering" - where scammers dupe their victims using psychological manipulation, instilling fear and urgency.

India has seen an alarming rise in such fraud with the unprecedented adoption of digital payments in the country over the last half decade.

Nearly 2.5 million people have lost some $25bn in 2025, a staggering 4,300% rise since 2021. The explosive jump in cases has finally prompted India's central bank, the Reserve Bank of India (RBI) to step in.

In a discussion paper released earlier this month, the central bank said it was mulling several measures to tackle the problem.

These include a one-hour lag at the payer's end in account-to-account transactions and additional authentication by a "trusted person" for high-value digital payments by vulnerable sections of society such as elderly people.

The paper also talks about limits and reviews of large credits to customer accounts to ensure these aren't mules (accounts used for illegal transfer of money), and giving people more control to switch on/switch off digital payments and set limits like they can for cards.

Several experts the BBC spoke to say that while the RBI's proactive stance is a welcome step, these proposals - which will be finalised after public comments and feedback - could end up having only a limited impact.

The first proposal, for instance, to have lagged payments could be effectual in preventing OTP fraud of the type that Alok fell for, but in value terms such scams are a "minuscule proportion of the overall fraud landscape", Rajesh Bansal, former CEO of the RBI's Innovation Hub, told the BBC.

"These scams were the dominant variety three or four years ago, but frauds have now moved to another level, and are far more sophisticated.""It is not going to be easy to implement a lag because there are so many parties involved in the payment network. There is no simple way to do it without changing the current architecture," says Wriju Ray of IDfy, a leading regulatory technology company.

The RBI acknowledges this in the discussion paper, saying introducing lags would require changes across the system, from transaction queuing to cancellation mechanisms, and would involve "cost and effort for the ecosystem".

Moreover, the central bank acknowledges, it would "conflict with the core design principle of immediacy of digital payments".

"It's like building an expressway and adding speed breakers every few kilometres," says Bansal.

And this friction is unlikely to help much.

"They [scammers] are just going to figure out a way to overcome the lag. For instance, they might ask for a customer to undertake a payment and wait for an hour for their acknowledgement so an alarm is not raised," says Ray.

According to him, some of the other measures being considered are fair but raise several questions.

"Additional checks for senior citizens is probably highly recommended but how does one comply? What if your so-called 'trusted adviser' is abroad? And what if they ask you to go ahead with a transaction that still ends up being a fraudulent one? Then who does the accountability move to?" asks Ray.