DELHI: India’s central bank is stepping up its campaign against digital fraud, deploying artificial-intelligence tools to track illicit money flows while urging citizens to remain wary of schemes that promise extraordinary returns. As scam networks evolve, regulators are racing to tighten coordination across agencies and the banking system
A Rapidly Escalating Threat
Speaking at the Delhi School of Economics, Reserve Bank of India Governor Sanjay Malhotra offered an unusually candid assessment of the dangers posed by digital fraud. Scam operations, he warned, are expanding into sophisticated networks that exploit weak points in the financial system—from dormant accounts to unsuspecting citizens pressured into acting as intermediaries.
Malhotra urged the public to maintain vigilance, avoid sharing sensitive information such as one-time passwords, and resist the lure of high-return investment pitches. “Customers should not be lured by schemes which promise huge returns,” he said, noting that the ecosystem of fraud is increasingly intertwined with social engineering tactics and rapid, anonymized movement of money.
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Tracking the Shadow Economy of Mule Accounts
A significant part of that underground activity flows through “mule accounts,” ordinary bank accounts repurposed sometimes with the owner’s knowledge, sometimes without it to move illicit funds. These accounts form the connective tissue of scam networks, allowing money to be siphoned off in minutes.
To confront this, the RBI last year launched MuleHunter.ai, an artificial-intelligence and machine-learning tool developed by the Reserve Bank Innovation Hub. The system now identifies roughly 20,000 suspected mule accounts every month.
Malhotra described the tool’s progress as “a good success rate,” adding that the central bank is on track to surpass its internal adoption milestone of 20 participating banks. The initiative, he said, is already in “high double digits.” With wider use, MuleHunter is expected to assist banks in freezing suspicious channels before fraudsters can disperse money across multiple locations.
Coordination Across India’s Cybercrime Network
The governor emphasized that technology alone will not be enough. The RBI is strengthening coordination with the Indian Cyber Crime Coordination Centre (I4C) under the Home Ministry, an agency tasked with centralizing cyber-forensic intelligence. The goal, Malhotra said, is to move toward a seamless intelligence-sharing model between regulators, law-enforcement agencies and financial institutions.
He noted that the challenge is reviewed not only within the central bank’s cyber-security teams but also at the governor and deputy-governor level a sign of the institution’s awareness of the systemic risk. The rise in digital payments has brought immense convenience, but it has also created pressure points that fraud rings exploit with speed and scale.
A Public on Alert, but Risks Continue to Spread
Even as authorities ramp up defenses, Malhotra acknowledged that the most immediate line of protection remains public awareness. The central bank has found that many cases begin with routine mistakes sharing OTPs during a phone call, clicking links from impostor customer-care numbers, or responding to financial opportunities that claim government or corporate backing.
The governor noted that the general public is “very vigilant and alert,” but stressed the need for continued caution. Digital crime syndicates, he said, are becoming more agile, shifting tactics as banks close in on existing patterns.
For now, the RBI is betting on a layered response: AI-driven detection, stronger inter-agency collaboration, industry accountability, and public education. As digital payments cement their place in India’s economy, the battle over their vulnerabilities is only beginning.
