HYDERABAD: As cyber fraud spreads across India’s digital payments landscape, Hyderabad’s police chief is pressing the country’s banking regulator to rethink how banks identify, monitor, and share information on suspicious accounts warning that without systemic reform, enforcement will remain a step behind fast-moving criminal networks.
The city’s Police Commissioner, VC Sajjanar, on Friday issued one of the bluntest public warnings yet from a senior law enforcement official about the scale and structure of cybercrime in India. Meeting top officials of the Reserve Bank of India (RBI), Sajjanar argued that financial fraud had evolved into an industrialised ecosystem one that could not be countered by incremental fixes or fragmented oversight.
At the heart of his message was a call for sharper technology, stricter banking controls, and faster cooperation between banks and investigators. Without these, he suggested, criminals would continue to exploit the same vulnerabilities that allow stolen money to vanish within minutes of a fraud being committed.
A Police Warning to the Banking Regulator
The remarks came during a courtesy meeting at the RBI’s Hyderabad Regional Office with Governor Sanjay Malhotra and Deputy Governor J. Swaminathan. While framed as a routine interaction, the discussion reflected growing unease among police agencies about the limits of current banking safeguards.
Sajjanar emphasised the RBI’s central role in protecting India’s rapidly expanding digital payments system, which has brought millions of new users into formal finance. That scale, he noted, has also made banks an attractive conduit for cybercriminals who rely on speed, anonymity, and regulatory gaps to move illicit funds before alarms are raised. For investigators, the challenge is no longer identifying fraud after the fact, but intercepting it while it is still in motion — a task that increasingly depends on banks’ internal systems.
Mule Accounts as the Engine of Fraud
In candid terms, the Police Commissioner described mule bank accounts as the “oxygen” of cybercrime. These accounts, often opened by students, daily wage labourers, or economically vulnerable individuals, are used to receive and rapidly disperse stolen money.
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According to Sajjanar, recruiters entice account holders with commissions ranging from ₹2,000 to ₹5,000, masking the criminal consequences behind what appears to be easy income. Once funds enter these accounts, they are quickly layered across multiple banks and jurisdictions.
“Within minutes, funds are moved across several accounts,” he said, making detection and recovery extremely difficult. By the time a victim reports a fraud or a bank flags an anomaly, the trail has often gone cold. This speed, police officials argue, has outpaced traditional investigative workflows that rely on manual requests for transaction details and delayed inter-bank coordination.
Technology Gaps and Procedural Bottlenecks
To counter this, Sajjanar urged the RBI to mandate the deployment of so-called “mule hunter” tools across banks software systems designed to detect patterns indicative of mule activity, such as rapid pass-through transactions or repeated account linkages.
He also proposed a centralised national database of mule accounts, accessible to banks and law enforcement agencies, that could generate real-time alerts and allow coordinated action before funds are fully dissipated.
Beyond technology, the Commissioner pointed to procedural hurdles that slow investigations: inconsistent bank statements, delays in sharing technical evidence, and fragmented communication between institutions. Standardised transaction records and faster data-sharing protocols, he said, could significantly improve recovery rates and prosecutions.
RBI’s Response and the Road Ahead
RBI officials, responding to the concerns, said the central bank and commercial lenders had already initiated multiple measures to curb digital fraud. Governor Malhotra assured the police delegation that the issues raised would be examined and that further steps would be taken to strengthen the safety and resilience of the payments ecosystem.
The meeting underscored a broader tension playing out across India’s financial system: a digital economy expanding at breakneck speed, and enforcement structures struggling to adapt in real time. Sajjanar was accompanied by senior Hyderabad Police officials, including Additional Commissioner of Police (Crimes) M. Srinivasulu, DCP (CCS) Shweta, and DCP (Cyber Crimes) Aravind Babu a signal that cyber fraud, once treated as a niche concern, has become a central policing priority.
