The Reserve Bank of India has proposed a comprehensive framework to standardise bank responses to cyber fraud, including quicker notifications, transaction-focused freezes, and digital processes to fight rising digital scam losses.
The Reserve Bank of India has moved to tighten the rules around how banks respond when accounts are suspected of being used in cyber fraud, proposing a standard process that would limit freezes, set response deadlines and force quicker customer notification. The draft framework, titled the Reserve Bank of India(Know Your Customer)Amendment Directions, 2026, follows a Supreme Court push for a uniform, time-bound protocol in such cases.
According to the draft, automated monitoring systems, including artificial intelligence and machine learning tools, would flag suspected mule transactions of ₹1,000 and above, prompting banks to place a temporary debit hold on the flagged amount. The central bank wants banks to focus on blocking the suspicious transaction value rather than the whole account, with full account freezes reserved mainly for suspected money-mule accounts. Nodal accounts, escrow accounts and special-purpose accounts would be exempt. Banks would have to tell customers on the same day digitally, or by the next day in physical form.
The proposal would cap temporary debit holds at 60 days unless a court or law-enforcement agency has issued a statutory order. Once a hold is applied, account holders would get 20 days to explain the transaction, after which banks would have 10 days to review the response. If the explanation is acceptable, the hold must be lifted immediately; if not, the matter can be escalated to investigators through the National Cybercrime Reporting Portal. The RBI has also said banks must appoint designated nodal officers and publish their contact details prominently, with customer complaints to be resolved within 30 days.
The draft lands amid mounting concern over cyber-enabled fraud. Data cited from the home ministry suggests Indians lost at least ₹22,495 crore to cyber fraud in 2025, after losses of ₹22,845 crore in 2024. In June, the National Human Rights Commission said losses over the past six years had reached about ₹52,976 crore, with nearly 8% linked to digital arrest scams. The RBI has already been tightening its fraud response framework more broadly: its Master Directions on Fraud Risk Management, issued on July 15, 2024, were designed to speed reporting, strengthen oversight and improve safeguards across regulated entities.
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