RBI proposes draft guidelines for temporary debit holds on suspected money-mule accounts
What happened
The Reserve Bank of India issued draft Know Your Customer amendment directions proposing a standard operating procedure for banks to place temporary debit holds on accounts linked to money-mule activity and cyber fraud. The framework applies to commercial, regional rural, small finance, payments, local area, and urban cooperative banks.
Why it matters
The rules execute an August 4 Supreme Court order requiring a standardized procedure for freezing fraudulent funds. Establishing explicit guidelines gives Indian lenders regulatory backing to restrict debits quickly on suspicious accounts, creating uniform operational standards across commercial and cooperative institutions.
Bigger picture
The proposal embeds operational anti-fraud protocols directly into India's 2025 Know Your Customer directions. It reflects growing judicial and regulatory pressure on banks to systematically disrupt illicit financial networks and protect consumers against cyber-enabled financial fraud.
Watch next
Public comments remain open through October 2, 2026, via the Connect 2 Regulate portal or email, after which final directions will be issued separately.