RBI’s 60-Day Debit Hold on Mule Accounts: What It Means for You
RBI’s draft lets banks block debits for up to 60 days on accounts suspected of carrying fraud money. When a hold can happen, your rights, and how to avoid it.
By Balaji Anbazhagan
· 5 min read
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The Reserve Bank of India has proposed the first common rulebook for temporarily freezing money in bank accounts suspected of being used for cyber fraud. Banks could stop money going out of a flagged account for up to 60 days. You would get a notice and a chance to explain. The proposal is still a draft, open for comments until 2 October 2026. Here is what it says and what it means for an ordinary account holder.
The short answer
- What: a draft Reserve Bank of India (Know Your Customer) Amendment Directions, 2026, with a standard procedure for temporary debit holds on suspected “money mule” accounts.
- Trigger: a bank’s monitoring system flags a suspicious transaction of ₹1,000 or more that does not fit your profile or links to an account already reported for fraud.
- Your rights: a notice with the reasons, 20 days to explain, and a decision from the bank. Money can still come in while the hold is on.
- Time limit: the hold should generally not exceed 60 days, unless the police or another authority tells the bank to continue.
- When: proposed to apply from 1 April 2027, though banks may start earlier.
What is a money mule?
A money mule is a person whose bank account is used to receive and pass on stolen money. Fraudsters rarely keep stolen money in their own accounts. They move it through other people’s accounts, often several in a few minutes, to make it hard to trace.
Many mules do not realise they are part of a crime. They are recruited through offers that sound harmless:
“Easy commission”
A WhatsApp or Telegram “job” asks you to receive money and forward it for a cut.
“Rent your account”
Someone offers a monthly fee to use your bank account, UPI ID or SIM.
Shared login
You hand over your net banking details, debit card or phone to a “friend” or “agent”.
When the police trace a fraud, all of these accounts get caught. So far, freezes have often covered the whole account, with no clear end date, even when the account holder only received a small amount. That is what the draft tries to fix.
Why the RBI is doing this now
Cyber fraud, including “digital arrest” scams where fraudsters pose as police or officials over video call, has grown fast. On 4 August 2026 the Supreme Court, hearing a case on digital arrest frauds, directed the RBI to frame a standard operating procedure for such holds. This draft is the RBI’s response.
How a debit hold would work
- Day 0
Hold placed
A transaction of ₹1,000 or more is flagged. The bank blocks debits and sends you a notice with reasons and an officer to contact.
- Within 20 days
You explain
Send your explanation and documents showing the money is genuine: an invoice, salary slip, rent agreement or chat with the sender.
- 10 days later
Bank decides
The bank decides within 10 days of your reply, or within 30 days of the hold if you do not reply.
- Day 60
Hold ends
The hold should not go beyond 60 days, unless the police or another authority instructs the bank.
A few more details in the draft:
| Question | What the draft proposes |
|---|---|
| Who does it apply to? | Commercial banks, small finance banks, payments banks, regional rural banks, local area banks and urban co-operative banks |
| What gets blocked? | Normally only the disputed amount. Freezing the whole account is for exceptional cases, as a last resort. |
| Can money still come in? | Yes. A debit hold stops money going out. Credits such as salary still arrive. |
| How is it detected? | Transaction monitoring, including AI and machine-learning tools, looking for activity that does not match your profile |
| Complaint handling | Grievances to be resolved within 30 days |
| Holds ordered by the police | Not covered by the 60-day limit; they follow the police instruction |
What it means for you
| If you… | What to know |
|---|---|
| Use your account normally | Nothing changes. Salary, UPI payments and bills that fit your usual pattern are not the target. |
| Receive money from strangers (freelancers, small sellers, landlords) | Keep invoices, orders and chats. If a payer turns out to be a fraud victim, these prove you received the money for real work or goods. |
| Get a hold notice | Reply within 20 days with documents. If the bank does not resolve it within 30 days, complain to the RBI Ombudsman. |
| Are offered money to “receive and forward” payments | Refuse. Letting your account be used this way can make you part of a criminal case, not just a frozen account. |
| Have lost money to a scam | Report it at once on 1930 or cybercrime.gov.in. Faster reports mean more mule accounts get frozen before the money moves on. |
What the draft does not cover
Critics, including the technology news site MediaNama, point out a few gaps: no interest or compensation if a hold turns out to be wrong, no requirement for a human to review an AI flag before the hold starts, and no process in this draft for returning frozen money to fraud victims. The RBI may change the rules after comments close on 2 October.
Frequently asked questions
Can a bank freeze my account without telling me? Under the draft, no. The bank must send you a notice with the reasons and contact details of an officer when it places a hold.
Will my whole balance be frozen? Normally only the flagged amount. The whole account can be frozen only in exceptional cases, such as a clear mule account.
How long can the hold last? Generally not more than 60 days from the date it is placed, unless the police or another authority asks the bank to continue it.
Is this rule already in force? Not yet. It is a draft. The RBI has proposed that it apply from 1 April 2027, although banks may adopt it earlier.
Where do I complain if the bank does not respond? First to your bank’s grievance officer. If there is no reply within 30 days, or you are unhappy with it, file a complaint with the RBI Ombudsman at cms.rbi.org.in.
Sources
- Reserve Bank of India, draft Reserve Bank of India (Know Your Customer) Amendment Directions, 2026 (comments invited until 2 October 2026): rbi.org.in
- Business Standard, “RBI proposes temporary debit holds on suspected money mule accounts”, September 2026: business-standard.com
- MediaNama, “RBI draft sets 60-day limit on cyber fraud bank holds”, September 2026: medianama.com
- National Cyber Crime Reporting Portal: cybercrime.gov.in
This article is for general information and education, not financial, tax or investment advice. Rules and rates change; check official sources or consult a qualified professional before acting. See our disclaimer.