RBI draft would freeze the disputed rupees, not the whole account

The Reserve Bank of India has proposed that banks freeze only the disputed sum in a suspected cyber-fraud or money-mule transfer, rather than lock the entire account. Draft directions released for public comment on 11 September would take effect on 1 April 2027, unless a bank adopts them sooner. Comments close on 2 October 2026.

The draft follows a Supreme Court order dated 4 August 2026 that told the RBI to write and circulate a standard procedure for temporary debit holds on amounts or accounts linked to mule activity and cyber-enabled fraud. High courts have spent 2026 dealing with the current practice. The Rajasthan High Court disposed of 105 writ petitions on this subject in a single judgment on 20 August.

The clock the draft actually sets

A suspected transaction is defined as a transfer of Rs 1,000 or more that monitoring systems flag as possible proceeds of cyber fraud or mule activity. Banks would be expected to use artificial intelligence tools to spot transfers that are sudden, out of line with a customer's declared profile, or linked to known fraud networks.

Once a hold is placed, the customer would have 20 calendar days to explain the transfer, with identity papers, context, or proof of the source of funds. The bank would then have 10 calendar days to decide. If the explanation holds, the hold comes off at once. If the customer stays silent, or the explanation fails, the bank would pass the case to local police through the National Cybercrime Reporting Portal and the CFCFRMS system.

The outer limit on a bank-initiated hold is 60 days, unless a law-enforcement agency or other competent authority issues a contrary instruction. That exception is the hinge. Medianama noted that the 60-day cap governs holds the bank places on its own suspicion. It does not limit a freeze that a police officer has ordered. Courts have been filling that second silence one petition at a time.

Whole-account freezes as a last step

Reporting on the draft has stressed the shift from account-level freezes to amount-level holds. The text treats a full-account lock as exceptional. That is the change customers have asked the courts for. A salaried account that receives a disputed Rs 8,000 transfer would, under the draft, lose access to those Rs 8,000 rather than to the month's salary sitting beside them.

The draft amends existing instructions on account operations and money mules under the KYC Directions, 2025. It does not rewrite the criminal law on fraud. Police can still tell a bank to hold more, and for longer. The RBI is regulating what the bank may do when the bank itself is the one that raised the flag.

Why April 2027 is the date

Banks need time to wire monitoring systems to the new clocks, the 20-day customer window and the 10-day decision window. Some will move earlier. The April date is the latest start, not the earliest.

For depositors the useful change is the existence of a timeline. Today a hold can sit without a published end date until a court or a policeman moves. From April 2027 a bank-made hold that no officer has adopted should expire at day 60. That is a narrower protection than the headlines suggest. It is still a rule where there was a habit.

The open question the draft leaves on the table is the police-ordered freeze. Until the RBI or the home ministry writes a clock for that category, the 105 petitions in Rajasthan will not be the last batch.