The banking regulator will reportedly amend its guidelines for banks based on information from the home ministry's cyber fraud fighting agency.
Credit: iStock Photo
New Delhi: The Reserve Bank of India plans to soon change guidelines to permit banks to temporarily freeze accounts suspected of being used to commit cyber crimes, as it battles a rising wave of online crime, three sources told Reuters.
The plans come as internal government data shows individuals have lost funds of nearly $1.26 billion in financial institutions to cyber fraud since 2021, with one of the sources saying about 4,000 fraudulent accounts are opened every day.
Tens of thousands of Indians receive daily telephone calls seeking to defraud them by accessing their bank accounts and wallets to siphon off money that then accumulates in the scammers' accounts.
To fight back, the RBI is likely to let banks suspend such accounts, freeing victims from first having to file police complaints, said two government sources and a third aware of the central bank's thinking.
India's finance ministry, home ministry and central bank did not immediately respond to Reuters' emails seeking comment.
While perpetrators can empty accounts within minutes, banks now freeze accounts only after police register a crime report, a procedure that sometimes takes days, given the number of crimes law enforcers must tackle, the sources said.
The suspensions would target accounts frequently misused to transfer funds gained from cyber crime, both government sources said.
The banking regulator will amend its guidelines for banks based on information from the home ministry's cyber fraud fighting agency, the Indian Cybercrime Coordination Centre, one of the government sources said.
Agency data shows that in the last three months the government has suspended 2,50,000 accounts used to siphon off funds, one of the government sources added.
The agency compiles data on misused bank accounts, electronic devices, mobile connections and criminals on a portal accessible to banks, police, and telecom operators.
Yet thousands of such fraud accounts operate with impunity since the hands of regulators and banks are tied in the absence of police complaints having been registered, one of the government sources said.
Names and details of miscreant account holders will be used to uncover more accounts held in other banks, and suspend those too, one of the government sources said.
However, a new centralised body is needed to investigate cyber frauds, said the source aware of the central bank's thinking, without elaborating.
($1=83.3086 rupees)