RBI Governor Malhotra & FS Secretary Nagaraju Call For Bank Collaboration On Digital Frauds

Reserve Bank of India (RBI) Governor Sanjay Malhotra and Financial Services Secretary M. Nagaraju have called on banks to work together and use AI tools to address the rise in digital fraud and mule accounts.

Malhotra on Friday urged banks, non-bank lenders and other regulated entities to collaborate to counter digital frauds, stressing the need for shared analytics and AI-based tools to detect mule accounts. He said while institutions must strengthen internal systems, collective action is required to identify suspicious transactions early. RBI data showed digital payment frauds at banks declined to Rs 520 crore in FY25 from Rs 1,457 crore in FY24, though the number of cases remained high. Malhotra said the central bank plans to move towards near real-time supervision using supervisory technology and AI tools, while keeping accountability with supervisors. He added enforcement actions are aimed at correction rather than punishment.

Separately, Nagaraju said the government is concerned about rising digital risks and losses faced by customers. Speaking at an industry event, he flagged mule accounts as a growing challenge and said wider use of AI and generative AI is needed for KYC, grievance redressal and fraud prevention.