RBI proposes debit hold on suspicious transactions
The Reserve Bank of India (RBI) has put forward proposals to amend its Know Your Customer (KYC) Directions for addressing suspected money mule accounts and cyber-enabled financial frauds. The draft amendments propose a uniform and time-bound standard operating procedure (SOP) for banks to temporarily hold a customer's debit card or account for up to 60 days.
This action would be triggered if a bank's system detects a suspicious transaction of Rs 1,000 or more, after which the bank must notify the customer and request an explanation. The customer would be given 20 days to provide their explanation, followed by a 10-day window for the bank to make a decision. If no explanation is received, the bank would have 30 days to decide.
The temporary debit hold would be lifted if the bank is satisfied with the explanation, and the bank would act immediately upon receiving instructions from law enforcement agencies or competent authorities.
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