Contents

Developments during the Half Year ended March 2026

I.1 Introduction

The Reserve Bank of India publishes half-yearly reports on management of foreign exchange reserves as part of its efforts towards enhanced transparency and levels of disclosure. These reports are prepared half yearly with reference to the position as at end-March and end-September each year. The present report (46^th in the series) is with reference to the position as at end-March 2026.

The report is divided into two parts: Part I contains the developments regarding movement of foreign exchange reserves, information on the external liabilities vis-à-vis the reserves, adequacy of reserves, etc., during the half-year under review. Objectives of reserve management, statutory provisions, risk management practices, information on transparency and disclosure practices followed by the RBI with regard to reserve management are covered in Part II.

Part-I

I.2 Movement of Foreign Exchange Reserves

I.2.1 Review of Growth of Foreign Exchange Reserves

During the half-year period under review, reserves decreased from USD 700.09 billion as at end- September 2025 to USD 691.11 billion as at end-March 2026 (Table 1 and Chart 1).

Although both US dollar and Euro are intervention currencies and the Foreign Currency Assets (FCA) are maintained in major currencies, the foreign exchange reserves are denominated and expressed in US dollar terms. Movements in the FCA occur mainly on account of purchase and sale of foreign exchange by the RBI, income arising out of the deployment of the foreign exchange reserves, external aid receipts of the Central Government and changes on account of revaluation of the assets.

I.2.2 Sources of Accretion to Foreign Exchange Reserves

On a balance of payments basis (i.e., excluding valuation effects), foreign exchange reserves decreased by USD 30.8 billion during April-December 2025 as compared to a depletion of USD 13.8 billion during April-December 2024. Foreign exchange reserves in nominal terms (i.e., including valuation effects) increased by USD 19.4 billion during April-December 2025 as against a decrease of USD 10.7 billion in the corresponding period of the preceding year.

Table 2 provides details of sources of variation in foreign exchange reserves during April-December 2025 vis-à-vis the corresponding period of the previous year. The valuation gain amounted to USD 50.2 billion during April-December 2025 as against a valuation gain of USD 3.1 billion during April-June 2024.

I.3 Forward Outstanding

The net forward asset (payable) of the Reserve Bank stood at USD 103.06 billion as at the end of March 2026.

I.4 External Liabilities vis-à-vis Foreign Exchange Reserves

India’s International Investment Position (IIP), which is a summary record of the stock of country’s external financial assets and liabilities as at end-December 2025, is furnished in Table 3. During the period between end-December 2024 and end-December 2025, the external assets increased by USD 127.2 billion and external liabilities increased by USD 23.8 billion.

The net IIP as at end-December 2025 was negative at USD 260.5 billion as against a negative net IIP of USD 363.9 billion at end-December 2024, implying that the sum of all external liabilities is more than that of the external assets in both periods.¹ There has been a decrease in the negative gap on a year-on-year basis.

I.5 Adequacy of Reserves

At the end of December 2025, foreign exchange reserves cover of imports (on balance of payments basis) stood at 10.8 months (11.3 months at end-September 2025). The ratio of short-term debt (original maturity) to reserves, which was 19.7 per cent at end-September 2025, increased to 21.9 per cent at end-December 2025. The ratio of volatile capital flows (including cumulative portfolio inflows and outstanding short-term debt) to reserves also rose from 66.1 per cent at end-September 2025 to 69.1 per cent at end-December 2025.

I.6. Management of Gold Reserves

As at end-March 2026, the Reserve Bank held 880.52 metric tonnes of gold, of which 680.05 metric tonnes were held domestically. While 197.67 metric tonnes of gold were kept in safe custody with the Bank of England and the Bank for International Settlements (BIS), 2.80 metric tonnes were held in the form of gold deposits. In value terms (USD), the share of gold in the total foreign exchange reserves increased from 13.92 per cent as at end-September 2025 to about 16.70 per cent as at end-March 2026.

I.7 Investment Pattern of the Foreign Currency Assets

The foreign currency assets comprise multi-currency assets that are held in multi-asset portfolios as per the existing norms, which conform to the best international practices followed in this regard. As at end-March 2026, out of the total FCA of USD 552.28 billion, USD 465.61 billion was invested in securities, USD 46.83 billion was deposited with other central banks and the BIS and the balance USD 39.84 billion comprised deposits with commercial banks overseas (Table 4). With the objective of exploring new strategies and products in reserve management while diversifying the portfolio, a small portion of the reserves is being managed by external asset managers. The investments made by the external asset managers are governed by the permissible activities as per the RBI Act, 1934.

I.8 Other Related Aspects

I.8.1 Financial Transaction Plan (FTP) of the IMF

During the half year under review, there were three purchase transactions aggregating USD 415.86 million and four repurchase transactions aggregating USD 223.91 million under the FTP of the IMF.

I.8.2 Investments under New Arrangements to Borrow (NAB) with IMF

India’s commitment under the IMF’s New Arrangements to Borrow (NAB) was last raised to SDR 8,881.82 million from January 01, 2021. RBI has NIL subscription under NAB as at end of March 2026.

I.8.3 SAARC Swap Arrangement

Under revised Framework on Currency Swap Arrangement for SAARC countries for the period 2024 to 2027, RBI has signed a Bilateral Currency Swap Agreements with the Royal Monetary Authority of Bhutan (RMAB) and the Maldives Monetary Authority (MMA). RMAB availed a swap of ₹15 billion on May 26, 2025, which was rolled over for the second time on February 26, 2026. RMAB has also availed an additional swap of ₹25 billion (INR 15 billion under the INR Swap Window and INR 10 billion under Standby Swap Arrangement) on March 23, 2026, for six months. Maldives Monetary Authority (MMA) has availed a swap facility of USD 400 million on October 22, 2024, which was rolled over for the second time for six months on October 23, 2025.

I.8.4 Investment in bonds issued by IIFC (UK)

The Reserve Bank has the mandate to invest up to USD 5 billion in the bonds issued by the India Infrastructure Finance Company (UK) Limited. As at end-March 2026, the amount invested in such bonds stood at USD 400 million.

Part-II

Objectives of Reserve Management, Legal Framework, Risk
Management Practices, Transparency and Disclosure

II.1. Objectives of Reserve Management

The guiding objectives of foreign exchange reserve management in India are similar to those of many central banks in the world. The demands placed on the foreign exchange reserves may vary widely depending upon a variety of factors including the exchange rate regime adopted by the country, the extent of openness of the economy, the size of the external sector in a country's GDP and the nature of markets operating in the country. While safety and liquidity constitute the twin objectives of reserve management in India, return optimization is kept in view within this framework.

II.2. Legal Framework and Policies

The Reserve Bank of India Act, 1934 provides the overarching legal framework for deployment of reserves in different foreign currency assets and gold within the broad parameters of currencies, instruments, issuers and counterparties. The essential legal framework for reserve management is provided in sub-sections 17(6A), 17(12), 17(12A), 17(13) and 33 (6) of the above Act. In brief, the law broadly permits the following investment categories:

• deposits with other central banks and the BIS;

• deposits with commercial banks overseas;

• debt instruments representing sovereign/sovereign-guaranteed liability with residual maturity for the debt papers not exceeding 10 years;

• other instruments / institutions as approved by the Central Board of the Reserve Bank in accordance with the provisions of the Act; and

• dealing in certain types of derivatives.

II.3 Risk Management

The broad strategy for reserve management including currency composition and investment policy is decided in consultation with the Government of India. The risk management functions are aimed at ensuring development of sound governance structure in line with the best international practices, improved accountability, a culture of risk awareness across all operations, efficient allocation of resources and development of in-house skills and expertise. The risks attendant on deployment of reserves, viz., credit risk, market risk, liquidity risk and operational risk and the systems employed to manage these risks are detailed in the following paragraphs.

II.3.1 Credit Risk

The Reserve Bank is sensitive to the credit risk it faces on account of the investment of foreign exchange reserves in the international markets. The Reserve Bank's investments in bonds/treasury bills represent debt obligations of highly rated sovereigns, central banks and supranational entities. Further, deposits are placed with central banks, the BIS and commercial banks overseas. RBI has framed requisite guidelines for selection of issuers/ counterparties with a view to enhancing the safety and liquidity aspects of the reserves. The Reserve Bank continues to apply stringent criteria for selection of counterparties. Credit exposure vis-à-vis sanctioned limit in respect of approved counterparties is monitored continuously. Developments regarding counterparties are constantly under watch. The basic objective of such an on-going exercise is to assess whether any counterparty's credit quality is under potential threat.

II.3.2 Market Risk

Market risk for a multi-currency portfolio represents the potential change in valuations that result from movements in financial market prices, viz. changes in interest rates, foreign exchange rates, equity prices and commodity prices. The major sources of market risk for central banks are currency risk, interest rate risk and movement in gold prices. These risks are managed using Value-at-Risk (VaR), Conditional Value-at-Risk (CVaR), scenario analysis, stress testing etc. Further, to manage interest rate risk, duration and permitted deviations from the duration are specified as per the prevailing market conditions.

Gains/losses on valuation of FCA and gold due to movements in the exchange rates and/or price of gold are booked under a balance sheet head named the Currency and Gold Revaluation Account (CGRA). The balances in CGRA provide a buffer against exchange rate/gold price fluctuations. The dated foreign securities are valued at market prices at the end of each business day and the appreciation/depreciation arising therefrom is transferred to the Investment Revaluation Account (IRA). The balance in IRA is meant to provide cushion against changes in the security prices over the holding period.

II.3.2.1 Currency Risk

Currency risk arises due to movements in the exchange rates. Decisions are taken on the long-term exposure to different currencies depending on the likely movements in exchange rates and other considerations over the medium and long-term. The decision-making procedure is supported by reviews of the strategy on a regular basis.

II.3.2.2 Interest Rate Risk

The crucial aspect of the management of interest rate risk is to protect the value of the investments as much as possible from adverse impact of interest rate movements. The interest rate sensitivity of the portfolio is identified in terms of the benchmark duration and the permitted deviation from the benchmark.

II.3.3 Liquidity Risk

Liquidity risk involves the risk of not being able to sell an instrument or close a position when required without facing significant costs. The reserves need to have a high level of liquidity at all times in order to be able to meet any unforeseen and emergency needs. Any adverse development on the external front would pose a demand on our forex reserves and, hence, the investment strategy needs a highly liquid portfolio. The choice of instruments determines the liquidity of the portfolio. For example, in some markets, treasury securities could be liquidated in large volumes without much distortion of the price in the market and, thus, can be considered as liquid. Except fixed deposits with the BIS/ commercial banks overseas / central banks and securities issued by supranationals, almost all other types of investments are highly liquid instruments which could be converted into cash at short notice. The Reserve Bank closely monitors the portion of the reserves which could be converted into cash at a very short notice to meet any unforeseen/ emergency needs.

II.3.4 Operational Risk and Control System

In tune with the global trend, close attention is paid to strengthen the operational risk control arrangements. Key operational procedures are documented. Internally, there is total separation of the front office and the back-office functions and the internal control systems ensure several checks at the stages of deal capture, deal processing and settlement. The deal processing and settlement system, including generation of payment instructions, is also subject to internal control guidelines. There is a system of concurrent audit for monitoring compliance in respect of the internal control guidelines. Further, reconciliation of accounts is done regularly. In addition to internal audit and independent monitoring, the financial accounts are audited by external statutory auditors. There is a comprehensive reporting mechanism covering significant areas of activity/ operations relating to reserve management. These are provided to the senior management at frequent intervals, depending on the type and sensitivity of information. The Reserve Bank uses SWIFT as the messaging platform to settle its trades and send financial messages to its counterparties, custodians of securities and other business partners. International best practices with respect to usage and security of SWIFT system are followed. The SWIFT applications are updated to the SWIFT recommended versions, along with strict compliance with all the mandatory security control measures as recommended by SWIFT. The Bank has successfully migrated to SWIFT ISO 20022 standards, for both incoming and outgoing messages, and its system is now enabled to interact with MX messaging formats having enhanced features.

II.4 Transparency and Disclosures

The Reserve Bank has been making available in the public domain data relating to Foreign Exchange Reserves, its operations in foreign exchange market, position of the country’s external assets and liabilities and earnings from deployment of Foreign Currency Assets and gold through periodic press releases of its Weekly Statistical Supplements, Monthly Bulletins, Annual Reports, etc. The Reserve Bank's approach with regard to transparency and disclosure closely follows international best practices. The Reserve Bank has adopted the Special Data Dissemination Standards (SDDS) template of the IMF for publication of the detailed data on Foreign Exchange Reserves. Such data are made available on monthly basis on the Reserve Bank's website.

¹Partially revised figures and hence may not tally with figures published in the previous reports.

A. Certificates of Authorisation issued by the Reserve Bank of India under the Payment and Settlement Systems Act, 2007 for Setting up and Operating Payment System in India

The Payment and Settlement Systems Act, 2007 along with the Board for Regulation and Supervision of Payment and Settlement Systems Regulations, 2008 and the Payment and Settlement Systems Regulations, 2008 have come into effect from 12th August 2008.

The list of 'Payment System Operators’ authorised by the Reserve Bank of India to set up and operate in India under the Payment and Settlement Systems Act, 2007 is as under:

B. Certificates of Authorisation Revoked by the Reserve Bank of India in exercise of the powers conferred under the Payment and Settlement Systems Act, 2007

C. Authorised entities whose Payment System operations have ceased.

D. Entities whose Certificate of Authorisation to operate a Payment System have been cancelled on account of voluntary surrender by the entity.

E. Entities whose Certificate of Authorisation to operate a Payment System have been cancelled as per regulatory requirement.

F. Entities whose Certificate of Authorisation to operate a Payment System is under process of cancellation as per regulatory requirement/Voluntary Surrender

I. Background

Over the past decade, digital payments in India have expanded at an unprecedented pace, reflecting a structural shift in the manner in which individuals and businesses conduct financial transactions. Digital transaction volumes have increased 38-fold, while transaction values have more than tripled. The compound annual growth rate (CAGR) of digital payments over this period stands at approximately 53% and 13% in volume and value terms respectively.

ii. The above growth has been supported by a diverse and interoperable payments ecosystem comprising credit and debit cards, Unified Payments Interface (UPI), Immediate Payment Service (IMPS), National Electronic Funds Transfer (NEFT), Real Time Gross Settlement (RTGS), mobile wallets, and net banking. Strong security architecture, including mandatory Additional Factor of Authentication (AFA), beneficiary name look-up facilities, transaction controls, apart from fast settlement cycles, have enhanced user confidence and promoted seamless digital usage.

iii. However, the potential of digital payments is impeded by complaints related to frauds. A typical fraud through digital payments may not involve technical compromise of systems, but mostly through manipulation of users through social engineering, coercion, or impersonation. Victims, acting under deception, themselves initiate and authenticate transactions, leading to ‘Authorised’ Push-Payment (APP) frauds. Given the instantaneous nature of payments through systems such as NEFT, RTGS, UPI and IMPS, the scope for timely intervention and recovery of funds becomes limited.

II. Regulatory measures to secure digital payments

iv. Over the years, the Reserve Bank has introduced several measures to strengthen the safety and resilience of digital payments. Two-factor authentication was mandated in digital payment transactions. Storage of actual card data by any entity in the payment chain, other than the card issuer, was sought to be restricted through device tokenisation (2019) and and card-on-file tokenisation (2021). Customer induced controls in cards were mandated in 2020 thereby empowering cardholders to switch on / off and set / modify transaction limits (within the overall card limit, if any, set by the issuer) for all types of transactions – domestic and international, at PoS/ online transactions/contactless transactions, etc.

v. Instructions regarding digital payment system controls for banks (2021) and non-bank PSOs (2024) were issued covering aspects such governance mechanisms for identification, assessment, monitoring and management of information systems and cyber security risks, along with baseline security measures for ensuring system resilience as well as for safe and secure digital payment transactions. In 2025, the Bank issued a principle-based framework for authentication of digital payment transactions to encourage introduction of new factors of authentication by leveraging upon technological advancements and to enable issuers to adopt additional risk-based checks beyond the minimum two-factor authentication based on fraud risk perception of the underlying transaction.

vi. The customer’s liability is limited in case of unauthorised electronic banking transactions as mentioned in instructions issued in 2016.

vii. RBI has also issued directions to various system participants to utilise the Mobile Number Revocation List (MNRL) available on the Digital Intelligence Platform (DIP) developed by Department of Telecommunications (DoT), to monitor and clean their customer database. Telecom Regulatory Authority of India (TRAI) has issued directions to use phone numbers that begin with the ‘1600xx’ series for calling customers regarding transactions or service-related provisions. Further, any marketing or promotional calls should be made from numbers in ‘1400xx’ series. These measures aim to help consumers distinguish between legitimate calls and potential scam attempts made by fraudsters.

viii. Indian Cybercrime Coordination Centre (I4C) has issued a Standard Operating Procedure to deal with complaints lodged with National Cybercrime Reporting Portal (NCRP).

ix. In 2024, Reserve Bank’s wholly owned subsidiary - Reserve Bank Innovation Hub (RBIH) has built Mulehunter.AI to enable quick and effective detection of mule bank accounts by the banks. The Reserve Bank is also presently working with RBIH to set-up prototype of a Digital Payment Intelligence Platform (DPIP) by harnessing advanced technologies (AI/ML) to mitigate payment fraud risks. To a remitting bank, the platform is envisaged to provide information about the beneficiary’s profile through a risk score generated on a real-time, transaction-by-transaction basis, even before the transaction is executed.

III. Scope for further action

x. Due to robust measures put in by place by banks under RBI’s guidance, frauds attributed to account take-over are now negligible and most frauds are Authorised Push Payments or APP frauds, which thrive in environments characterised by easy, and frictionless, payments wherein funds can be transferred instantaneously by customers (victims) with minimal effort before realising that they are being duped. Post-transaction remedies to recover such funds being limited, a defrauded user is often left with a few remedies and uncertain outcomes, which are time-consuming and show low recovery rates.

xi. Figures from the National Cyber Crime Reporting Portal (NCRP) indicate that frauds related to digital payments are on the rise. As can be seen from the data below:

Fraudsters are deploying various tactics, such as bogus call centres, deepfake-driven impersonation scams and mule account networks. Almost all sections of society especially the vulnerable groups such as senior citizens have fallen prey to such APP frauds. Therefore, there is an urgent need to put in place systems and processes to address these issues. This discussion paper seeks stakeholder views on the need for introducing extra layers of safeguards.

xii. The discussion paper sets out the following four options, namely,

1. Lagged credit for authorised push payments other than low value;

2. Additional authentication by trusted person for high-value digital transactions by vulnerable sections of society;

3. Only accounts with satisfactory additional review to receive large credits; and

4. Customer-induced controls

These options are aimed at the broad objectives, viz., inducing a lag in select category of digital payments (by way of process-level changes or in terms of additional due diligence requirements) thereby buying time for both customers and PSOs to limit fraudulent transactions from being executed or proceeds thereof from being moved quickly, and, empowering the customer through provision of customised controls.

Each option is detailed in the sections that follow, along with specific questions on which stakeholder feedback is being sought. Stakeholders are requested to provide their views on the desirability and feasibility of each option, both on a standalone basis and in combination with the other possible mechanisms, while keeping in mind the measures already in place or in the works.

Option 1: Lagged credit for authorised push payments

Electronic payments to merchants are ordinarily enabled by banks and Payment Aggregators (PAs) after undertaking the requisite due diligence of the merchants. In such cases, payment networks typically provide chargeback mechanisms as part of the dispute resolution framework. No comparable safeguard exists in the case of account-to-account transfers. Accordingly, introducing a time lag for certain APP transfers to the bank account of an individual, or to the account of a sole proprietorship or partnership firm, at both the payer’s and the payee’s ends, may serve as an effective fraud-mitigation measure.

1.1 International experience:

1) United Kingdom (UK): The UK introduced a formal mechanism (via the Payment Services (Amendment) Regulations 2024) to delay outbound account-to-account payments in suspected fraud cases. Under this framework, payment service providers (PSPs) can hold an outbound payment for up to 72 hours (roughly three business days) if there are reasonable grounds to suspect the payment instruction was induced by fraud or dishonesty. During this delay window, the funds remain frozen in the payer’s account, and the PSP must notify the payer and explain the reason. The PSP may also use this time to contact the beneficiary’s bank or law enforcement.

2) Singapore: Singapore has implemented a preventive approach centered on cooling-off periods and dynamic transaction safeguards. Under the Enhanced Anti-Scam Framework (EASF) and Shared Responsibility Framework (SRF) introduced by the Monetary Authority of Singapore (MAS) and the Association of Banks in Singapore, banks must impose a minimum 12-hour cooling-off period when a customer performs certain high-risk actions – for example, activating digital banking on a new device, resetting critical account credentials, or initiating a first-time transfer to a new payee. During this period, outgoing transactions from that account may be suspended or limited, creating a window to detect and block unauthorised access or scam attempts.

3) Sweden: In May 2024, the Swedish Bankers’ Association announced a coordinated package to combat frauds. This included adding cooling-off periods, additional confirmation steps for new payees and limits on unusually large or atypical transactions. The design of the specific measure was left to the individual bank based on bank-specific conditions.

1.2 Possible approach:

Introducing a lag at the payer’s end is important, as this is the stage at which the decision to transfer funds is made and where social-engineering tactics are deployed. A short delay before execution of the debit can act as a preventive control by disrupting the fraudster’s psychological influence over the victim and by giving the payer an opportunity to reconsider the transaction.

To ensure that low-value transactions continue to remain frictionless, such lag mechanisms are proposed to be applied only to APP transactions above a specified threshold. A threshold of ₹10,000 per transaction may be considered appropriate. As per information available with the National Cyber Crime Reporting Portal (NCRP), transactions above ₹10,000 account for approximately 45 per cent of reported fraud cases by volume, but about 98.5 per cent by value.

Under this approach, once a customer (individuals including sole proprietors plus partnership firms) initiates an APP transaction exceeding ₹10,000, a lag period of one hour could be applied. The lag can be applied at the payer’s end or at the payee’s end or both. From an ease of implementation perspective, it is suggested that the lag is introduced at payer’s end only.

During this period, the payer’s bank would provisionally debit the customer’s account, and the payer would retain the option to cancel the transaction for any reason. The proposed one-hour window is consistent with the “golden hour” principle in fraud-risk management, under which the initial period following a fraudulent transaction is critical to prevent the dissipation of funds. During this period, if the payer’s bank identifies the transaction as unusual or atypical, it may seek reconfirmation from the payer, while sharing appropriate information on the nature of the suspicion and cautioning the payer. If the payer, after reviewing the information provided, still chooses to proceed, the transaction will be executed by payer bank.

Further, recognising that certain transactions may be time-sensitive, an option may be provided to the payer to override the lag for a specific transaction by explicitly authorising it, for instance through a whitelisting mechanism. In such cases, the lag may be bypassed. Instead of allowing whitelisting of transactions or in addition to it, payees can be whitelisted by the payer. All payments to such whitelisted payees will not be subjected to time lag.

1.3 Pros and Cons:

Pros:

1. Fraudsters typically rely on creating urgency and maintaining continuous psychological pressure on the victim to prevent deliberation. Introducing lag at payer’s end breaks the fraudster’s psychological control.

2. A delay at the beneficiary’s end acts as an additional layer of defence even if the payer-side control is bypassed or fails.

3. By slowing down the movement of funds, the mechanism increases the window available for detection and intervention.

4. Visible and effective safeguards reassure users that the payment ecosystem is secure and responsive to fraud risks. This is particularly important for onboarding new users and retaining confidence and trust among existing users while making digital payments.

Cons:

1. Implementing lag would require changes across bank systems and payment system infrastructure, including transaction queuing, cancellation mechanisms, etc. These changes would involve cost and effort for the ecosystem.

2. Introducing lag for certain transactions may conflict with the core design principle of immediacy of digital payments.

3. Users accustomed to instant transactions could find it difficult to understand why certain payments are delayed while others are not. Clear communication and consistent application of rules would be critical to avoid this confusion.

4. Given that an option to whitelist transactions would be available, fraudsters may persuade victims to bypass the safeguard, thereby reducing its effectiveness.

1.4 Brief contours:

Question 1: Given the various measures initiated by RBI to ensure safety and security of digital payments and some others proposed in the paper, whether there is a need to introduce the above option from a cost-benefit perspective?

Question 2: Is there any category of transaction / account which may be exempted from this approach?

Question 3: Is the suggested threshold of ₹10,000 adequately balancing fraud risk mitigation and customer convenience?

Question 4: Is the suggested mandatory lag at payer’s end required to balance the need to mitigate fraud while supporting efficiency of digital payment transactions or should the same be optional depending upon the perceived risk underlying the transaction as determined by the payer’s bank?

Question 5: Is the suggested mandatory lag of one-hour at payer’s bank reasonable?

Question 6: What are the views with respect to whitelisting? Whether it should be transaction specific or payee specific or both?

Option 2: Additional authentication by trusted person for high-value digital transactions by vulnerable sections of society

Certain sections of the society, such as citizens above a certain age or differently-abled persons (persons with disabilities) may be particularly vulnerable to social engineering–based frauds. Such frauds often involve impersonation of family members or the fabrication of urgent scenarios relating to medical, legal, or other emergencies. These targeted incidents frequently result in disproportionately higher financial losses, underscoring the need to consider enhanced protective measures for this customer segment, alongside sustained awareness initiatives.

2.1 International experience

i. Sweden: As a part of the package unveiled in May 2024 by Swedish Bankers’ Association, it is understood that banks may advise customer that a particular transaction has to be approved by a person trusted by the customer.

ii. United States of America: Some banks offer trusted contact facility to their customers to enable the banks to contact these trusted people in case of suspicion of fraud. A trusted contact can access the account of a bank’s customer, provided the latter has provided a financial power of attorney.

iii. Ireland: Any customer who is an individual may choose to nominate a Trusted Contact Person. The financial institution will establish contact with the trusted contact person, when the customer is not reachable or where financial abuse, including fraud, is suspected. However, this trusted person has no decision-making authority and acts only as a support layer.

2.2 Possible Approach:

The policy framework outlines specific provisions for enhanced security measures aimed at safeguarding vulnerable customer segments undertaking specified digital payment transaction. These measures may be made mandatory for citizens aged 70 years and above and persons with disabilities, while remaining optional for all other individual customers. This prioritization ensures tailored protection for those at higher risk of fraud or exploitation due to age or disability, while allowing for flexibility for the broader customer base.

The applicability focuses on APP transaction initiated by vulnerable customers. Notably, merchant transactions (including UPI, card-based, and net banking payments), recurring payments (e.g., e-mandates, NACH), and cheque-based transactions can be explicitly exempted from these requirements. This distinction ensures that the safeguards target high-risk peer-to-peer transfers without disrupting routine commercial or automated payment workflows.

The enhanced safeguard mechanism can be in the form of a “trusted person” designated by a vulnerable customer. This trusted individual acts as another layer of authentication for high-value transactions, say, those above ₹50,000. It is noteworthy that nearly 92% of value of frauds reported in NCRP are above this limit. Thus, the threshold balances operational efficiency for smaller transactions with robust protection for larger-value transfers.

Any change of trusted person may be permitted only after a mandatory 24-hour cooling period, thereby ensuring that such decisions are deliberate and informed.

For opting out, vulnerable customers may withdraw from the safeguard system after a 24-hour waiting period following their request. Banks are required to clearly explain the associated risks to the customer before processing such requests, thereby ensuring informed decision-making. Simultaneously, a seamless digital pathway must be provided for these customers to re-enroll in the safeguard system at any time in future, thus maintaining accessibility and flexibility without compromising security. This approach prioritises customer autonomy while embedding safeguards against potential coercion or hasty decisions.

2.3 Pros and Cons

Pros:

• Provides an additional layer of verification by an independent trusted individual who is unlikely to be subjected to the same coercion, urgency, or social engineering pressure as the account holder.

• Particularly useful for account segments with large balances, where the potential financial loss from fraudulent transactions may be significant.

Cons:

• Existing banking practice recognises only the account holder(s) or authorised signatories as legitimate operators of an account. Under this framework, the additional authenticator would neither have a legal nor beneficial interest in the account; yet would effectively influence the execution of outward transactions by virtue of the authentication requirement.

• May result in delays in transaction execution if the trusted individual is not immediately available to authenticate the transaction.

2.4 Brief contours:

Question 7: Is the coverage of the solution adequate or should any other segment of population be mandatorily covered? Is the age limit reasonable? Should all PwD be covered or only a certain section thereof and, if so, what should be the basis for selection?

Question 8: Are there any legal, contractual, or consumer protection concerns regarding the role envisaged for additional authenticator?

Question 9: What level and form of due diligence should be prescribed for verifying an additional authenticator who does not maintain a customer relationship with the bank? Whether banks should be permitted to rely primarily on customer declaration and consent, or whether independent verification of the additional authenticator be required?

Question 10: Is the suggested threshold of above ₹50,000 reasonable?

Question 11: What guardrails should be laid out to protect the interests of vulnerable sections choosing to opt out of the facility?

Option 3: Accounts to receive credits commensurate with nature of relationship with banks

As part of the KYC process, a bank is required to obtain supporting documents in respect of the nature of business and financial status of the customer. Besides, it is also required to undertake ongoing due diligence of an account to ensure that transactions therein are consistent with bank’s knowledge about the customer, customer’s business and risk profile, the customer’s declared sources of funds/wealth, etc. In order to further strengthen these guidelines, and to control use of bank accounts as “mules” to route money proceeds of Digital Frauds, it is proposed to bring in a regulatory measure of limiting aggregate credits in an account without an additional review of satisfactory business relationship.

3.1 Possible approach:

RBI shall prescribe a ceiling, say ₹25 lakh, for annual aggregate credits into a bank account for which additional proof in support of genuine requirement of higher aggregate credit is not taken from the customer (hereinafter called as a low credit turnover account).

A bank may fix a limit, not higher than this prescribed ceiling, for such low credit turnover accounts, based on its own internal risk management.

All bank accounts, existing and new, shall have a flag associated with them. If the account is a low credit turnover account, the flag shall be on, and off otherwise. The default flag for each account shall be on. A bank may turn off the flag of an account as per a policy to be formed by it, on the basis of guidance provided by the RBI through regulations / directions. This may be based on income, revenue, turnover, wealth, assets, etc. of the account holder or his / her parents, etc. for which additional documentation shall be taken by the bank.

Whether a flag is to be turned on or not shall be decided at the time of onboarding the customer. However, the flag can be turned on or off even later, based on additional information received by the bank. For existing customers, the bank shall have to take a view as per its policy on the basis of the guidance provided by regulations in a time bound manner, as may be provided by regulations.

A bank account with flag turned on shall receive annual aggregate credit of up to the limit set by the bank. If credit is received beyond this limit, the bank shall permit only shadow credit into the account. Such funds shall be available for utilization only after the bank has satisfied itself that the transaction is genuine, based on additional information and / or documents submitted by the intended beneficiary. However, should a beneficiary not be able to satisfy the bank within a period of, say, 30 calendar days from the date of such shadow credit, the same shall be reversed and the amount sent back to the source. The bank may also turn off the flag after satisfying itself about the same.

It is clarified that each bank shall continue to comply with the extant Reserve Bank’s instructions on KYC including ongoing due diligence.

The overall objective of this approach is to ensure enhanced responsible conduct of bank accounts without unduly inconveniencing genuine customers.

3.2 Pros and Cons:

Pros:

• Strengthens the identification and prevention of fraudulent activities in bank accounts.

• Allows funds to be credited only after proof of genuine activity.

Cons:

• Difficulty in assessing the low credit turnover account

• Additional requests for documentation may lead to customer inconvenience.

3.3 Brief contours:

Question 12: What are the views on this approach, including from the perspective of proportionality?

Question 13: Is the suggested threshold of ₹25 lakh considered reasonable?

Question 14: Are 30 calendar days enough for the customer to satisfy his / her bank for crossing the aggregate credit threshold?

Option 4: Customer-induced controls

Currently, card-based payment systems provide customers with a ‘switch on/off’ facility for domestic and international usage as well as for setting limits for different transaction types. This facility has proven effective in empowering customers in terms of enhancing their control over payment instruments and reducing instances of fraud. However, similar user-controlled mechanisms are not uniformly available across other digital payment channels.

4.1 International scenario:

Singapore:

It has formally introduced a customer-controlled ‘kill switch’. Customers can instantly lock their online banking account via mobile app or hotline and, thereby, disable fund transfers, digital banking access, and payment functions. Such action can be reversed only after identity verification by the bank.

Australia:

Some banks have rolled out “digital padlock” or “safe block” option, which would allow customers to disable digital access in case they suspect unauthorised activity in their accounts.

4.2 Possible approach:

4.2.1 Transaction level controls

Customers can be provided with digital payment controls which would consist of a ‘switch on/off’ facility for any digital payment mode as well as for setting limits for different transaction types at the account level.

This would allow customers to control the debit transactions at the account level across any or all digital payment channels. It may be made accessible to the customer either through bank branch visits or through Internet banking, Mobile banking, Phone banking, Interactive Voice Response or any other authenticated bank interfaces.

4.2.2. Kill-switch

Customers may also be provided with a single facility to disable all digital payment transactions from the account (‘kill switch’) at one stroke.

Kill-switch activation at the account level shall override other controls / configurations set-up by the account holder. Once the kill-switch is enabled, disabling the kill-switch to re-activate digital payments can be permitted either through digital modes after taking proper authentication / verification measures, or through a physical visit to a bank branch by the account holder. For disabling the kill-switch through digital modes, the bank may put in place relatively stringent authentication / verification measures to ensure the genuineness of the customer.

4.2.3 Other aspects

Certain kind of transactions such as payment mandates, standing instructions, etc may be exempted from the controls and kill-switch.

While the digital payment controls and the kill switch can certainly be extended to existing customers as an optional facility, a key policy question is whether or not digital payment modes should be disabled by default for new customers unless explicitly enabled by them.

On one hand, keeping digital payment modes disabled by default for new customers may strengthen the ‘secure by default’ principle. Newly opened accounts are often vulnerable to misuse in cases of identity theft, mule accounts, or onboarding fraud. However, disabling digital payment facilities by default may also affect customer convenience and ease of adoption of digital payments. Many customers today expect immediate access to payment channels such as UPI, cards, and internet banking at the time of account opening.

4.3 Pros and Cons:

Pros:

• This measure strengthens the principle of customer-controlled security. Customers can customise access to payment modes according to their usage patterns and risk appetite.

• In fraud situations, time is critical. A kill switch enables customers to immediately disable all digital payment access without navigating multiple systems or contacting different banks.

• This measure ensures a more uniform and robust customer protection framework across the payments ecosystem.

Cons:

• Customers may inadvertently activate the kill switch or disable certain payment channels, resulting in disruption to legitimate transactions.

• Implementing a universal kill switch across multiple payment channels such as UPI, cards, net banking, wallets, and other digital instruments may require significant technological development for banks.

• The controls may not serve their purpose in cases wherein fraudsters gain temporary access to a customer’s device.

4.4 Brief contours:

Question 15: What other transactions, apart from payment mandates and standing instructions, be exempted from the suggested digital payment controls and kill-switch?

Question 16: Should new accounts be “default off” for all the digital payment channels, or should certain low-risk channels be enabled by default? If so, what should these be?

Question 17: If the kill-switch has been applied, should the re-activation of digital payments be facilitated only through visit to a bank branch or through digital channels as well? If the latter, what guardrails should be put in place to check misuse?

V. Submission of comments and Way forward

1. Comments / feedback on this Discussion Paper, particularly with reference to the key questions raised in the paper and any other matters germane to the subject may be submitted to RBI through ‘Connect 2 Regulate’ link on RBI website.

2. After analysing comments received on the Discussion Paper, RBI will consider issuing draft guidelines on introducing additional measures for countering digital payment fraud on its website.

3. The last date for submission of comments is May 08, 2026.

Today, the Reserve Bank released the results of its 72nd round of the quarterly Order Books, Inventories, and Capacity Utilisation Survey (OBICUS), which was conducted during Q4:2025-26 and covered 1057 manufacturing companies. The survey¹ provides a snapshot of the demand conditions in India’s manufacturing sector during October-December 2025.

Highlights:

• At the aggregate level, capacity utilisation (CU) in the manufacturing sector increased to 75.6 per cent in Q3:2025-26 from 74.3 per cent in the previous quarter. The seasonally adjusted CU (CU-SA) increased by 60 basis points from the previous quarter and stood at 75.5 per cent in Q3:2025-26. Both CU and CU-SA for Q3:2025-26 increased by 20 basis points as compared to their levels in the corresponding quarter of the previous year (Chart 1 and Table 1).

• Manufacturers reported higher growth in new orders during Q3:2025-26 on annual (y-o-y) basis, however the same decreased on sequential basis (q-o-q) (Chart 2 and Table 2A).

• As a ratio to sales, the finished goods inventory (FGI) decreased while the raw material inventory (RMI) increased during Q3:2025-26 (Chart 3 and Table 3A).

Note- Please see the excel file for time series data.

ANNEX 1: Data Tables

Note: The methodology for computations of order book growth and inventory to sales ratios is given in the RBI press release dated October 8, 2021 (link: https://www.rbi.org.in/Scripts/PublicationsView.aspx?id=20650). Please also see footnote 2 on direct estimation of RMI since 53rd round of the survey.

¹ The survey responses are voluntary, and the results reflect the views of the respondents, which are not necessarily shared by the Reserve Bank. Results of the previous survey round were released on the Bank’s website on February 06, 2026.

Today, the Reserve Bank released the results of March 2026 round of its bi-monthly urban consumer confidence survey (UCCS)¹. The survey collects current perceptions (vis-à-vis a year ago) and one year ahead expectations of households on general economic situation, employment scenario, overall price situation, own income and spending. The survey was conducted during February 25 to March 10, 2026, covering 6069 respondents across 19 major cities.

Highlights:

1. Consumer confidence for the current period deteriorated in the pessimistic zone with the Current Situation Index (CSI)² at 95.7 vis-à-vis 98.1 in the previous round (Chart 1).

2. Confidence for the year ahead, though optimistic, also saw a decline from the previous round. The Future Expectations Index (FEI) dropped by 3.2 points to 120.2 (Chart 1).

3. Households’ current perception on economic situation ebbed for the second consecutive round, registering a decrease of 5.1 points from the previous round. The outlook also declined by 6.2 points, though remained in the optimistic zone (Table 1).

4. The current perception and year-ahead expectation of households on employment situation have worsened by 2.8 and 7.8 points, respectively (Table 2).

5. Households’ sentiments regarding price and inflation have deteriorated for both time horizons (Tables 3 and 4).

Note: Please see the excel file for time series data³

¹ The survey results reflect the respondents’ views, which are not necessarily shared by the Reserve Bank. Results of the previous survey round were released on the Bank’s website on February 06, 2026.

² CSI and FEI are compiled on the basis of net responses on the economic situation, income, spending, employment and the price level for the current period (as compared with one year ago) and a year ahead, respectively. CSI and FEI = 100 + Average of Net Responses of the above parameters.

³ Unit-level data for previous rounds of the survey are available on the Bank’s ‘Database on Indian Economy’ (DBIE) portal (weblink: https://data.rbi.org.in/DBIE/#/dbie/home) under the head ‘Unit-level Data’.

⁴ ‘Net response’ is the difference between the percentage of respondents reporting optimism and those reporting pessimisms. It ranges between -100 and 100. Any value greater than zero indicates expansion/ optimism and values less than zero indicate contraction/ pessimism.

Today, the Reserve Bank released the results of March 2026 round of its bi-monthly Rural Consumer Confidence Survey (RCCS)^{1 2}. The survey collects current perceptions (vis-à-vis a year ago) and one year ahead expectations of households, on general economic situation, employment scenario, overall price situation, own income and spending, besides information on inflation. The survey was conducted during February 25 to March 10, 2026, covering 8,928 responses in the rural and semi-urban areas across all Indian states and three major UTs.

Highlights:

1. Rural consumer confidence for the current period has worsened; the Current Situation Index (CSI)³ declined and moved into the pessimistic zone after six rounds (Chart 1; Table 9).

2. The one-year-ahead outlook, as captured by the Future Expectations Index (FEI), has also deteriorated to 125.1, although remains firmly in optimistic zone (Chart 1; Table 9).

3. Higher proportions of respondents in the current survey round reported rising prices and inflation for both current period and year ahead horizon (Tables 3 and 4).

4. Households’ current inflation perception increased by 50 bps to 5.6 per cent. Moreover, their one-year ahead expectation has also rose by 60 bps to 6.8 per cent (Table 12).

Note: Please see the excel file for time series data⁴

¹ The rural consumer confidence survey covers both rural and semi-urban areas.

² The survey results reflect the respondents’ views, which are not necessarily shared by the Reserve Bank. Results of the previous survey round were released on the Bank’s website on February 06, 2026.

³ CSI and FEI are compiled with the net responses on five survey parameters viz., general economic situation, employment, income, price level and spending, for the current period (as compared with one year ago) and a year ahead, respectively. CSI and FEI = 100 + Average of Net Responses of the above parameters.

⁴ Unit-level data for previous rounds of the survey are available on the Bank’s ‘Database on Indian Economy’ (DBIE) portal (weblink: https://data.rbi.org.in/DBIE/#/dbie/home) under the head ‘Unit-level Data’.

⁵ ‘Net response’ is the difference between the percentage of respondents reporting optimism and those reporting pessimisms. It ranges between -100 and 100. Any value greater than zero indicates expansion/ optimism and values less than zero indicate contraction/ pessimism.

Today, the Reserve Bank released the results of March 2026 round of its bi-monthly Inflation Expectations Survey of Households (IESH)^{1 2}. The survey was conducted during February 25 to March 10, 2026, in 19 major cities, with 6,075 responses.

Highlights:

1. The current median inflation perception of households inched up by 30 basis points (bps) to 7.2 per cent as compared to the previous round. Their inflation expectations for the three months and one year ahead rose by 60 bps and 20 bps to 8.5 per cent and 8.8 per cent, respectively [Charts 1a and 1b; Table 3].

2. For both the short-term and one-year ahead periods, the shares of respondents anticipating a rise in general prices and inflation increased for the second consecutive round [Tables 1(a) and 1(b)].

3. Households expect price and inflationary pressures across most of the product groups including food product, non-food product and cost of services for both the time horizons [Tables 1(a) and 1(b)].

Note: Please see the excel file for time series data³