Digital fraud: Banks to cover up to 85% of loss, once in lifetime

BANK FRAUD COVER NOW CAPPED AT ₹25K — YOUR MSME WORKING CAPITAL JUST GOT RISKIER.

RBI's new 85% compensation rule sounds protective. It is not. Sole proprietor loses ₹50,000 to UPI fraud? Bank pays max ₹25,000. You absorb ₹25,000 — in a month when GST refund is already 90 days late and your raw material supplier demands cash payment.

This hits hardest in textile, auto components, food processing — sectors running on 10-15% net margins. One fraud. One lifetime claim. Factory owner cannot claim again. Bank audits tighten. Working capital lines shrink next renewal.

Smart MSME founders do this NOW: (1) Audit your digital banking controls — who has access to your credentials, payment OTPs, vendor accounts? (2) Shift high-value supplier payments to RTGS-verified bank channels, not UPI. (3) Document every transaction. Recovery evidence matters — RBI pays 85% AFTER recoveries reduce the loss. No proof of recovery = lower payout.

If your factory ran ₹3-5 crore annual turnover last year and lost ₹40,000 to digital fraud in the first half, what happens to your cash flow when the bank takes 60 days to settle the claim?