Mumbai, Feb. 7 -- The Reserve Bank of India (RBI) on Friday unveiled a set of measures aimed at protecting customers, including compensation for those who fall prey to minor frauds, as well as plans to curb the mis-selling of financial products. Governor Sanjay Malhotra said that the central bank will issue three draft guidelines for customer protection. The first concerns mis-selling; the second, the recovery of loans and the engagement of recovery agents; and the third, limiting customer liability for unauthorized electronic banking transactions. "It is also proposed to introduce a framework to compensate customers up to an amount of Rs.25,000 for loss incurred in small-value fraudulent transactions," said Malhotra. Customers who fall prey to small-value digital frauds will receive 85% of the value of the fraud, up to Rs.25,000, whichever is lower. This will be given once for every customer who faces such fraud and will not be available after that. "We want the customer to be alert after making a mistake once. He/she should rectify the mistake. A mistake can be forgiven once, and we are compensating for that mistake," said Malhotra. Malhotra said that a person should learn from others' mistakes, but if not from others, then at least from their own mistakes. For instance, someone has lost Rs.50,000 in a digital fraud. Then, 85% of that will be Rs.42,500, and since the limit is Rs.25,000, the person will get Rs.25,000. In the second case, someone has lost Rs.20,000, and 85% of that will be Rs.17,000. That person will get Rs.17,000. Binod Kumar, chief executive of state-owned Indian Bank, said that the proposed fraud framework, focusing on improving customer centricity and grievance redressal across the banking system, will enhance customer trust and service quality. "Most customer frauds arise from gaps in the system that allow bad actors into banking," said Vivek Singh, vice-president, risk products at integrated identity platform IDfy. Singh said that close to 5% of fully digital onboarding attempts are rejected at the KYC stage due to high-risk indicators. "The RBI holding regulated entities accountable should lead to stronger onboarding and monitoring frameworks, and greater trust in the system," said Singh....