Mumbai: In light of the alarming rise in digital banking frauds, the Mumbai Grahak Panchayat (MGP), a leading consumer organization, has called on Finance Minister Nirmala Sitharaman to implement stronger protections for bank depositors in the upcoming Union Budget 2025-26, scheduled for February 1, 2025.
MGP highlighted a staggering eightfold increase in bank transaction frauds, citing a Reserve Bank of India (RBI) report:
• April–September 2023: ₹2,623 crores
• April–September 2024: ₹21,367 crores
Describing digital banking as “unsafe and vulnerable,” MGP urged the government to introduce full insurance coverage for bank deposits against cyber frauds. It contended that despite RBI’s 2017 guidelines to limit customer liability in such cases, these are often ignored by banks and ombudsmen, leaving depositors—especially senior citizens—helpless and frustrated.
Among its proposed measures, MGP advocated adopting a “Principle of Strict Liability”, under which banks must restore the full amount lost in digital frauds to a depositor’s account within seven days of the fraud being reported. Furthermore, MGP recommended a separate insurance policy to safeguard depositors against unauthorized electronic transactions and cyber frauds.
MGP also pointed out that ₹78,213 crores of unclaimed deposits are currently lying in the RBI’s Depositors’ Education and Awareness Fund (DEA Fund). A portion of this amount could be utilized to fund the proposed insurance premiums.
MGP additionally appealed for complete insurance coverage for all bank deposits in the event of a bank’s liquidation. Currently, only deposits up to ₹5 lakhs are insured under the Deposit Insurance and Credit Guarantee (DICG) scheme.
MGP thus urged Finance Minister Sitharaman to include these recommendations in the forthcoming budget, emphasizing the need to protect depositors’ interests amidst the increasing risk of digital frauds and potential bank failures.
Advocate Shirish Deshpande, Chairman of MGP, stated, “Since the issue of digital frauds affecting banking transactions and siphoning off deposits impacts a large number of depositors, we hope the Finance Minister will take serious note of this. We propose that an insurance scheme be implemented through this budget to protect depositors. The figures in our proposal are based on data from the Reserve Bank of India , making them reliable and authentic. Hackers are constantly developing new tricks to compromise bank accounts. Despite creating awareness among consumers, their new methods often outpace precautions, leaving senior citizens and youngsters particularly vulnerable. Hence, we are pressing for this proposal.”
Deshpande further elaborated, “Through this proposal, we aim to show the government how unclaimed deposits can fund the insurance premium for protecting bank depositors. If deposits remain unclaimed for 10 years, they are transferred by banks to the Reserve Bank of India under the Depositors’ Education and Awareness (DEA) Fund. This fund currently holds a staggering ₹78,213 crores. Even if the government utilizes only the interest from this fund, it could significantly contribute to implementing this insurance scheme.”
The plea seeks to address the growing concerns of millions of depositors and ensure a safer, more secure banking environment in India.
