RBI Cyber Fraud Rule is set to bring relief to bank customers facing account restrictions after suspected cyber fraud.
Under the proposed framework, banks would freeze only the disputed amount instead of blocking the entire bank account.
RBI Cyber Fraud Rule Changes Account Freezes
The new framework aims to make action against suspected fraudulent transactions more targeted.
If a particular transaction is flagged, the amount linked to the dispute can be placed on hold while the customer’s remaining legitimate balance continues to remain accessible.
The move is significant for customers who may otherwise lose access to their entire bank balance because of a cyber-fraud complaint involving only a limited amount.
Only Disputed Amount May Be Frozen
Under the proposed approach, banks will not automatically impose a blanket freeze on the entire account merely because a transaction is suspected to be connected with cyber fraud.
The focus will instead be on identifying and restricting the disputed amount.
This can allow customers to continue using the undisputed portion of their funds for regular expenses and payments.
Customers May Get Time to Respond
The proposed process also provides customers an opportunity to explain the transaction and complete the required verification.
According to the reported framework, customers would get 20 days to provide their response and cooperate with the process.
If the customer does not cooperate or the investigation indicates wrongdoing, the matter can be taken forward to the police or relevant authorities.
RBI Plans AI-Based Fraud Detection
The framework also envisages greater use of technology to identify suspicious transactions.
Artificial intelligence could be used to detect potentially fraudulent activity and help banks respond more quickly.
The proposed changes are aimed at balancing two objectives: preventing cyber fraud and ensuring that genuine customers do not face unnecessary restrictions on their legitimate money.
When Will the New Rule Apply
The reported framework is proposed to take effect from April 1, 2027.
Until the new system becomes effective, customers should continue following the existing procedures of their bank and the relevant cybercrime authorities when reporting or disputing fraudulent transactions.
The proposed change could make the process more proportionate by separating the money under suspicion from the customer’s other legitimate funds.
