MGP Calls for Stronger Digital Fraud Protections for Bank Depositors Ahead of 2025 Budget

Mumbai, India: With an alarming rise in digital banking frauds, the Mumbai Grahak Panchayat (MGP), a prominent consumer organization, has urged Finance Minister Nirmala Sitharaman to strengthen protections for bank depositors in the upcoming Union Budget 2025-26. This comes in light of a staggering eightfold increase in digital fraud cases as reported by the Reserve Bank of India (RBI).

From ₹2,623 crores (April–September 2023) to ₹21,367 crores (April–September 2024), digital frauds have ballooned, and MGP has highlighted the vulnerability of digital banking in this growing crisis. To counteract the mounting risks, MGP has called for full insurance coverage for bank deposits against cyber fraud, alongside a proposal for a "Principle of Strict Liability." This would ensure that any losses in digital fraud incidents are fully reimbursed to depositors' accounts within seven days of reporting.

Senior citizens, often the most vulnerable to such frauds, remain helpless when these issues are ignored by banks or ombudsmen, MGP points out. The organization suggests utilizing part of the ₹78,213 crores in the RBI's Depositors' Education and Awareness Fund (DEA Fund) to cover the insurance premiums required for this safeguard.

Additionally, MGP called for comprehensive insurance coverage of bank deposits, similar to the protection offered in the case of bank liquidation. This would replace the current ₹5 lakh cap under the Deposit Insurance and Credit Guarantee (DICG) scheme.

Advocate Shirish Deshpande, Chairman of MGP, has implored the government to consider these vital recommendations as the digital banking landscape becomes increasingly unsafe. “Given the rise in sophisticated banking frauds, it is critical that depositors’ funds are protected,” Deshpande said.

With the Union Budget presentation set for February 1, 2025, MGP hopes these crucial proposals will receive prompt attention.