RBI plans kill switch and switch on/off feature to curb digital payment frauds

The Reserve Bank of India (RBI) is studying a 'kill switch' option for banking customers that would let them instantly stop all financial transactions from their account if they suspect a digital scam. The proposal was flagged in the RBI Annual Report and is being examined jointly by the government and the central bank.

A kill switch is a control that disables a system, account or service immediately in an emergency. In the banking context, the idea is to integrate an emergency button into bank or payment apps. If a customer fears that fraudsters are pushing them to transfer money, one tap could freeze all outgoing transactions across the account.

The trigger for this is the sharp rise in 'digital arrest' scams. Fraudsters impersonate police, CBI or other agency officials on video calls, accuse the victim of serious crimes such as money laundering, and use fake identity cards and forged warrants to create panic. Victims have lost large sums while staying on the call for hours. Customers across India are estimated to have lost around Rs 3,000 crore to such scams, and the Supreme Court took suo motu notice of the issue in October 2025.

A high-level committee under the Ministry of Home Affairs (MHA) has been examining the digital arrest problem and has also looked at a kill switch as one possible safeguard. The RBI's proposal moves this from a security feature inside a particular bank to a system-wide tool inside payment apps.

The central bank has also proposed extending the existing 'switch on / switch off' option to all digital payment modes. Today, customers can already turn domestic and international card transactions on or off. The plan is to apply the same logic to UPI, internet banking and other electronic channels.

Under the wider system, a user could switch off UPI, debit and credit card use, internet banking, international transactions and ATM withdrawals from a banking app, internet banking page or even SMS. The service can then be turned on only when the customer actually needs it.

For exam-going students, the proposal sits at the intersection of financial regulation, consumer protection and cyber-fraud. It also shows how the RBI is using product design — not just rules — to limit losses from social-engineering scams that have become a major financial crime category in India.