Mumbai, March 6 -- The central bank is proposing a safety net for one of the world's largest digital payment ecosystems, offering to partially reimburse victims of cyber fraud-even when the victims themselves are at fault.

The Reserve Bank of India (RBI) on Friday proposed that it, along with banks, will compensate victims of fraudulent digital banking transactions of up to Rs.50,000. The customer will be paid up to 85% of the loss, or up to Rs.25,000, whichever is lower. This will be shared between the central bank, the customer's bank and the bank where the money was transferred.

The catch is that customers will get this only once in a lifetime. Governor Sanjay Malhotra said last month that this is a way to forgive an initial lapse in...