RBI Floats Draft Rules To Standardise Account Blocking In Cyber Fraud Cases

The Reserve Bank of India (RBI) has proposed new draft rules to standardize account blocking procedures in cyber fraud cases, according to a report. The new guidelines, titled the Reserve Bank of India (Know Your Customer) Amendment Directions, 2026, came shortly after the Supreme Court directed the central bank to establish a uniform and timely protocol for handling accounts linked to cyber frauds. The draft rules are set to take effect from April 1, 2027, though banks can implement them sooner.

The proposed rules suggest that banks will employ automated transaction-monitoring tools, including AI and machine learning systems, to identify potential mule transactions of ₹1,000 or more. Upon detection, banks must immediately place a temporary debit hold on the flagged account, which will remain in effect for a maximum of 60 days unless a court or law enforcement agency issues an explicit directive.

Account holders will be digitally notified of the hold within 24 hours or physically within the following day. Banks must also provide a 20-day window for the account holder to explain the situation, after which the bank must review the submission within 10 days. If the explanation is deemed unsatisfactory, the bank can escalate the case to law enforcement agencies through the National Cybercrime Reporting Portal within 30 days.

If the response is satisfactory, the bank must lift the temporary debit hold and inform the account holder.

The draft rules also introduce strong grievance redressal measures, mandating banks to appoint designated nodal officers responsible for resolving customer grievances within 30 days. The rules initially apply to non-nodal, non-escrow, and non-special-purpose accounts. The RBI's move aims to curb the rising trend of cyber frauds in India, with data indicating that Indians lost at least ₹22,495 crore in 2025, compared to ₹22,845 crore in 2024.