On 11 September 2026 the RBI published a draft procedure that would let banks place a temporary hold on money leaving an account they suspect is being used to move fraud proceeds. If your account were flagged, you could not send money out for up to 60 days, unless the police direct otherwise. It is a draft, and the point is not to panic. The point is to know what flags an account and what to do if yours is flagged.
What a "mule account" is
Criminals who steal money online need bank accounts to receive it and move it on quickly. Those accounts are called mule accounts. Some belong to people who knowingly rent or sell access for a cut. Others belong to people who never realised what passed through.
The draft follows a Supreme Court order of 4 August 2026. According to Verdictum's report, a bench led by Chief Justice Surya Kant directed the RBI to adopt and circulate, within four weeks, an SOP for placing temporary debit holds on accounts linked to cyber fraud. The same report cites the I4C's status report: digital arrest complaints fell from 123,672 in 2024 to 16,377 in the first half of 2026, and ₹18.05 crore had been restored to victims across 36,290 cases.
What the draft proposes
Everything below is as reported by FCC Times, MediaNama and Indian Pay Calculator. I could not open the RBI's own document, so check the final text when it appears.
Who is covered: commercial banks, small finance banks, payments banks, regional rural banks, local area banks and urban cooperative banks. Nodal, pool and escrow accounts are excluded.
What triggers it: a suspected mule transaction of ₹1,000 or more, spotted through monitoring systems and AI or ML tools. The bank can act without waiting for the police.
What a hold does: it blocks money going out. Incoming credits are still allowed. A hold on the whole account is meant only for exceptional cases, as a last resort.
What you are told: immediately, with reasons and the contact of a responsible officer.
The clock works like this. You get 20 days to explain the transaction. The bank decides within 10 days of your explanation, or within 30 days of the hold if you say nothing. If the bank still suspects fraud, it refers the case to the police, who get 30 more days. Per the RBI's wording, the bank "must remove the temporary debit hold on the 31st day from the date of reference" if no one instructs otherwise. The maximum is 60 days without a police instruction. Complaints must be answered within 30 days.
The reports say it would become mandatory from 1 April 2027, with earlier adoption allowed. Public comments closed on 2 October.
What critics point out
MediaNama lists gaps. The 60-day limit does not cover holds the police instruct. The draft does not require a human to review before an automated system flags a transaction as small as ₹1,000. It offers no interest or compensation if a hold turns out to be wrong. And it lacks the money restoration mechanism the Supreme Court directed. The final version may change.
If you take many small payments
The draft's trigger is a suspected mule transaction of ₹1,000 or more, which is not a high bar. A shop, a tutor or a freelancer who receives many payments from people they barely know is the kind of account that could look unusual to a monitoring system. A few habits help if a bank ever asks questions:
Keep an invoice, order record or chat for each payment, even the small ones.
Put your business name and a reference on payment requests, so the bank statement matches your records.
Do not receive money on behalf of friends, relatives or "clients" you do not know. Money that is not yours is the hardest to explain.
None of this guarantees you will never be flagged. It does mean that, if you are, replying inside the 20 days takes an hour rather than a week.
Do this today
Never rent, lend or sell your account or UPI ID. "Easy commission" for letting someone use your account is one common way ordinary people end up as mules.
If unexpected money arrives, do not spend it and do not send it back yourself. Tell your bank in writing and keep a copy.
Keep proof for large or unusual receipts. This matters most for freelancers and small sellers who get payments from many people. Invoices, chat messages and contracts all count.
Save your bank's grievance contact. The draft expects banks to run a grievance process with nodal officers.
Do not keep everything in one account. A small buffer elsewhere means a hold on one account does not stop rent or an EMI.
If you are a victim of fraud, report it at once through the national cyber helpline 1930.
If your account is held
Do not argue by phone alone. Reply in writing inside the 20 days, attach the proof of what the money was for, and note the date and the officer's name. If the bank does not resolve it, escalate through its grievance route and, afterwards, the RBI Ombudsman, as Indian Pay Calculator advises. A debit hold is not seizure: your balance stays in your account.
The takeaway: the rule aims at fast freezes for fraud money, and the cost is that an honest account can occasionally get caught. Proof and prompt replies are your protection. This is general information, not legal or financial advice. The draft is not final, so check the RBI's published text.
