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The Reserve Bank of India (RBI) has taken a major step to crack down on the cases of cyber fraud and money mule (fraudulent transfer of money through fake accounts) amid the increasing scope of digital banking and online financial transactions. In compliance with the recent order of the Supreme Court, the central bank has issued draft ‘Reserve Bank of India (KYC) Amendment Directions, 2026’. The main objective of these proposed rules is to make the process of imposing Temporary Debit Hold on suspicious bank accounts uniform (SOP based) and to break the syndicate of cyber criminals. Along with this, this step will also protect the common and honest bank customers from the trouble of suddenly freezing their accounts without notice.
The Supreme Court had taken a strict stand regarding the growing network of cyber frauds across the country by immediately transferring the money to different bank accounts and withdrawing it through ATM or UPI (Money Mule Accounts).
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The Supreme Court, in its order dated August 4, 2026, had directed the RBI to issue a clear Standard Operating Procedure (SOP) Prepare and implement.
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The objective of this SOP was to ensure that whenever there is suspicion of cyber fraud or suspicious transactions in an account, banks should immediately and legally impose a temporary debit hold on that account or the specific disputed amount in the account.
After the implementation of this draft rule, common citizens and banking consumers will get many important benefits:
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Quick recovery of defrauded amount: If a citizen is involved in an online financial fraud and immediately registers a complaint on the helpline (1930 or portal), under the new standardized rules banks will be able to immediately block (debit hold) the fraud amount in the receiver’s account, thereby saving the money before it is withdrawn.
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Relief from unnecessary freezing of entire account: Earlier, it was seen in many cases that due to small amount received accidentally from a third person or through business transaction, the police or banks used to seize the entire account. There will be clarity in the new rules that partial hold will be imposed only to the extent of doubtful amount and not the operation of the entire account of the innocent customer will be halted.
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Time-bound Debit Hold: Under the draft proposals, debit hold cannot be placed on accounts indefinitely without any legal investigation or FIR. It is proposed to set a maximum time limit (eg 60 days) for this, due to which the investigating agencies will have to work faster.
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Transparent Information and Right to Appeal: If any restriction is imposed on an account, the bank must compulsorily inform the customer through SMS, email or letter about the valid reason and the path to resolution.
This draft circular issued by RBI will be applicable to almost all institutions of the banking system:
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All Commercial Banks (Public and Private Sector Banks)
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Small Finance Banks (SFBs) and Payments Banks
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Regional Rural Banks (RRBs) and Local Area Banks
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Urban Cooperative Banks (UCBs)
The Reserve Bank has invited feedback and suggestions from the public, financial experts and banking institutions before finalizing these draft rules. to send suggestions Last date 02 October 2026 It has been determined.
There are two official ways to submit suggestions:
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Through website: Official website of RBI (www.rbi.org.in) and available there ‘Connect 2 Regulate’ Submit your feedback directly by clicking on the section.
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by email: You can also send your opinion directly through email. For this, it is mandatory to write in the subject line of the email:
Feedback on Draft Reserve Bank of India (Know Your Customer) Amendment Directions, 2026 And send it to the email ID specified by RBI.
RBI will issue final master directions after reviewing the responses received from the public and all stakeholders.