In an effort to combat an increase in online crime, the central bank of India intends to soon amend regulations to allow banks to temporarily freeze accounts that they believe are being used for cybercrimes.
The announcement of the plans coincides with internal government data revealing that since 2021, people have lost almost $1.26 billion in financial institution funds due to cyber fraud; according to one source, approximately 4,000 new fraudulent accounts are opened daily.
Every day, calls targeting tens of thousands of Indians are made in an attempt to steal money from them by breaking into their wallets and bank accounts and taking money that ends up in the scammers’ accounts.
To fight back, the regulator, the Reserve Bank of India (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 250,000 accounts used to siphon off funds, one of the government sources added.
The organization gathers information on mobile connections, electronic devices, bank accounts that have been misused, and criminals on a portal that banks, law enforcement, and telecom companies can access.
However, thousands of these fraudulent accounts continue to operate without consequence because banks and regulators are powerless to intervene in the event that no police complaints are filed, according to a government source.
According to one of the government sources, the names and personal information of dishonest account holders will be utilized to find and shut down additional accounts that are kept with other banks.
The source, who is aware of the central bank’s thinking, stated, without providing further details, that a new centralised body is required to look into cyber frauds.
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