Governor Sanjay Malhotra stated on Friday that cooperation between banks, non-bank financiers, and other organizations under Reserve Bank of India (RBI) regulation is essential to safeguarding consumers and preserving confidence in the financial system.
RBI Governor Emphasizes Collaboration to Fight Digital Fraud
According to Malhotra, cooperative efforts are necessary to develop common analytics and systems that can identify mule accounts and suspicious transactions early and proactively, even as individual institutions must improve their own instruments, methods, and procedures.
The value of digital payment frauds at banks decreased to ₹520 crore in FY25, including 13,516 transactions, from ₹1,457 crore and 29,082 transactions in FY24, according to the RBI’s annual report.
Mule Accounts and Their Risks
Usually inactive, mule accounts—so named because they serve as conduits for monies that do not belong to the account holder—can abruptly exhibit a rise in low-value, high-volume transactions. To assist banks in identifying these accounts, the regulator has taken action.
In November, Malhotra said that the Mule Hunter technology, which was introduced to detect digital fraud, was demonstrating a high success rate. The Reserve Bank Innovation Hub’s artificial intelligence (AI)-enabled system, MuleHunter.ai, is identifying over 20,000 mule accounts each month, according to a November 20 report from news agency PTI.
According to Malhotra, “protecting consumers’ interests is not only a goal for all of us; it needs to become the cornerstone of a healthy and robust financial system.” Although digital platforms have made things more convenient and inclusive, he warned that inadequate safeguards may also allow for unfair recovery tactics, opaque pricing, and inadequate disclosures.
Ensuring Fair Outcomes for Consumers
“Our goal should be to make sure that innovations and digitalization are in line with fair results for consumers,” he said, noting that safeguarding consumers from the growing number of digital scams has drawn national attention.
Additionally, according to Malhotra, the RBI plans to make monitoring more off-site than on-site and closer to real-time rather than sporadic. “This will also include using AI-enabled tools and SupTech (supervisory technology) more extensively while maintaining judgment and responsibility, firmly with supervisors.”
🔒 RBI Digital Fraud Monitoring
- Tool: MuleHunter.ai (AI-enabled)
- Mule Accounts Detected: 20,000+ per month
- Focus: Early detection & prevention of digital fraud
- Scope: Banks, non-bank financiers & regulated entities
- Goal: Protect consumers & maintain financial system trust
He also said that the RBI’s department of regulation might promote evidence-based rule-making with comparable tools.
Malhotra said that the regulator’s stance is often not harsh when it comes to enforcement measures against banks and other regulated organizations. He said that the goal is to change direction, both by alerting the relevant institutions to the issues and by educating people about appropriate behavior standards and legal requirements.
According to a December 30 article from Mint, the RBI imposed less severe fines on banks in 2025, with the median punishment on lenders being almost half that of the previous two years. The quantity of fines decreased, but the number of enforcement actions increased—from 26 in 2023 and 30 in 2024 to 38 in 2025. These included penalties for small finance and payments institutions, foreign banks, and the public and private sectors.
⚖️ RBI Enforcement & Supervision
- Enforcement Actions: 38 in 2025 (up from 30 in 2024)
- Penalties: Median fines reduced nearly 50%
- Entities: Public, private, foreign banks & small finance/payments banks
- Supervision: Moving to off-site, near real-time, AI-enabled monitoring
- Objective: Evidence-based regulation & consumer protection
Frequently Asked Questions
1. Why is the RBI focusing on teamwork to reduce online fraud?
Due to the fact that digital fraud often involves many institutions and platforms. Working together makes it possible to exchange statistics and identify suspect activity early on, such as mule accounts.
2. What are mule accounts, and what makes them dangerous?
Illegal money is sent using mule accounts. They are important facilitators of digital fraud since they often remain dormant then abruptly display several little, quick transactions.
3. How successful is the MuleHunter.ai tool from the RBI?
Every month, MuleHunter.ai finds over 20,000 mule accounts, demonstrating a high level of effectiveness in spotting fraud early.
4. Has India seen a decrease in digital payment fraud?
Indeed. Both the number of transactions and the amount of digital payment fraud decreased from ₹1,457 crore in FY24 to ₹520 crore in FY25.
5. Will RBI’s supervisory strategy evolve going forward?
Yes, while maintaining the importance of human judgment, RBI intends to move toward off-site, near real-time monitoring utilizing AI and SupTech capabilities.
Conclusion
RBI Governor Sanjay Malhotra has said unequivocally that combating digital fraud needs teamwork rather than individual efforts. As digital banking continues to grow, continued confidence in India’s financial system will need improved cooperation, more astute oversight, and a strong emphasis on consumer protection, even while technology and AI tools like MuleHunter.ai are producing benefits.
Disclaimer
This content is for informational purposes only and does not constitute financial, legal, or regulatory advice. Readers should rely on official RBI communications or consult professionals before making decisions.
