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The Reserve Bank of India (RBI) has proposed a new framework to establish uniform standard operating procedures (SOPs) for banks dealing with accounts and transactions suspected of being linked to cyber frauds. Called the Reserve Bank of India (Know Your Customer) Amendment Directions, 2026, the draft norms come barely a month after the Supreme Court (SC) directed the central bank to build a uniform, time-bound protocol for dealing with accounts implicated in cyber frauds. The RBI has invited public comments on the proposed rules till October 2. The draft norms are scheduled to take effect from April 1, 2027, although banks can choose to implement them earlier as well. Under the draft framework, automated transaction-monitoring tools, including AI and machine learning systems, will flag suspected mule transactions of ₹1,000 and above. After that, banks will be required to immediately place a temporary debit hold on the flagged account in question. The draft rules also mandate banks to notify the account holder digitally on the same day or physically by the end of the next day. Another key takeaway from the proposed new system is that banks will be required to focus on freezing the suspected transaction amount, rather than the entire account. An account-wide hold may only be implemented in cases of suspected money-mule accounts. The proposed rules also impose a 60-day cap as the maximum duration for a temporary debit hold in the absence of explicit statutory orders from a court or law enforcement agency. Nodal accounts, escrow accounts, and special-purpose accounts are exempt from these measures. Once their account is put on debit hold, the account holder will have a 20-day window to provide an explanation. Following this, banks must review the submission within 10 days. If the response is unsatisfactory, banks can escalate the case to law enforcement agencies through the National Cybercrime Reporting Portal (NCRP-CFCFRMS) within 30 days. Else, if the response is satisfactory, the bank must immediately lift the hold and notify the account holder. As directed by the apex court, the draft rules also prescribe strong grievance redressal measures. Banks are required to appoint designated nodal officers, whose contact details must be displayed on its website and at all branches. The onus will also be on these nodal officials to resolve customer grievances within 30 days. The draft rules are set to take effect on April 1, 2027, although banks may choose to implement them earlier as well. The latest policy push comes amid a surge in cyber frauds over the past few years. As per data sourced from the home ministry, Indians reportedly lost at least ₹22,495 Cr to cyber fraud in 2025 as against ₹22,845 Cr in 2024. In June this year, the National Human Rights Commission (NHRC) also said that Indians have lost around ₹52,976 Cr to cyber-enabled frauds in the past six years, with nearly 8% of the losses linked to “digital arrest” scams. As per reports, nearly 7.1% of the attempted digital consumer transactions in India were suspected fraud in 2025, almost double the equivalent rate globally (3.8%). To curb this, Union home minister Amit Shah earlier this year directed officials to improve the National Cybercrime Helpline using AI to ease the process of reporting cybercrimes. He also called for addressing the issues related to bank accounts being frozen as part of cyber fraud investigations. In line with this, RBI earlier this year also issued directives to limit the liabilities of customers in cases of cyber frauds. The central bank announced that customers, losing up to ₹50,000 in cybercrime cases, would be eligible for compensation of up to 85% of the net loss amount or ₹25,000, whichever is lesser.
document fetched 2026-09-15 02:52 · canonical https://inc42.com/buzz/rbi-floats-draft-rules-to-standardise-account-blocking-in-cyber-fraud-cases