RBI plans curbs on suspect bank accounts to fight cyber fraud

The Reserve Bank of India plans to soon change guidelines to permit banks to temporarily freeze accounts suspected of being used to commit cyber crimes, as it battles a rising wave of online crime, three sources told Reuters.

The plans come as internal government data show individuals have lost funds of nearly $1.26 billion in financial institutions to cyber fraud since 2021, with one of the sources saying about 4,000 fraudulent accounts are opened every day.

Tens of thousands of Indians receive daily telephone calls seeking to defraud them by accessing their bank accounts and wallets to siphon of money that then accumulates in the scammers’ accounts.

To fight back, the regulator is likely to let banks suspend such accounts, freeing victims from first having to file police complaints, said two government sources and a third aware of the central bank’s thinking.

The Finance Ministry, Home Ministry and central bank did not immediately respond to Reuters’ emails seeking comment.

While perpetrators can empty accounts within minutes, banks now freeze accounts only after police register a crime report, a procedure that sometimes takes days, given the number of crimes law enforcers must tackle, the sources said.

The suspensions would target accounts frequently misused to transfer funds gained from cybercrime, both government sources said.

The banking regulator will amend its guidelines for banks based on information from the Home Ministry’s cyber fraud fighting agency, the Indian Cybercrime Coordination Centre, one of the government sources said.