Online financial fraud has become a major worry for millions of Indians. From phishing links and fake investment schemes to OTP scams and digital arrests, more people are losing money online than ever before. With nearly every household now connected to the internet, digital transactions have become routine — but so have threats.
Against this backdrop, RBI Governor Sanjay Malhotra on Friday highlighted what the central bank is doing to protect citizens and ensure stolen money does not vanish without a trace.
Malhotra was speaking after the RBI’s Monetary Policy Committee (MPC) meeting, where the central bank cut the repo rate by 25 basis points to 5.25%. During the press conference, he faced a question on what the RBI is doing to tackle online fraud and whether a mechanism is being developed for recovering money once it is stolen.
RBI acknowledges the challenge — prevention and recovery both in focus
Calling digital fraud a “serious and relevant issue”, the governor said the RBI and multiple other agencies like banks, Ministry of Home Affairs and law enforcement agencies are working hard to prevent such frauds and improve recovery of stolen funds.
“This is a serious and relevant issue, and the RBI is doing its best to ensure that such frauds don’t happen. Banks, law enforcement agencies and the Ministry of Home Affairs have already taken several measures. We are also taking initiatives to create awareness among people about digital fraud,” Malhotra said.
He admitted that recovery of stolen funds is still difficult. “Once such frauds happen, we often see minimal recovery,” he said.
According to him, the matter is also being examined at various legal levels. Courts are looking at the issue, and some judgments have given directions to the RBI to strengthen recovery mechanisms.
“The Kerala High Court has given directions, and the Nagpur bench of the Maharashtra High Court has also issued rulings. The issue of how recovery can be ensured after digital fraud is now before the Supreme Court,” he said.
Malhotra emphasised that all stakeholders — the RBI, courts, police, the Ministry of Home Affairs, and others — are taking the issue seriously. “Everyone is working not only to reduce such cases, but also to develop a mechanism where stolen money can be recovered,” he added.
Courts are shaping the roadmap for recovery
Recent judicial orders have added new dimensions to the conversation. In a key ruling, the Bombay High Court said probe agencies cannot freeze an entire bank account accused of receiving fraudulent funds. Instead, they can only block the disputed amount.
The court noted that banks sometimes freeze entire accounts without proper instructions, even causing harm to innocent account holders.
The judgment clarified: Investigating agencies cannot debit-freeze full accounts under the Bharatiya Nagarik Suraksha Sanhita (BNSS).
They may place a lien only on disputed funds. Police must approach a magistrate to formally attach property suspected of being linked to fraud.
The bench also allowed affected customers to seek compensation for wrongful account freezing. These rulings reflect the confusion around how digital fraud funds should be handled — a gap that both banks and law enforcement are still learning to navigate.
Digital India is expanding — so is cybercrime
India’s digital footprint is expanding rapidly — over 86% of households now have internet access. Payments, savings, government services and investments have all moved online.
But this rise in convenience has come with risk. The National Cyber Crime Reporting Portal recorded fraud cases amounting to Rs 36.45 lakh as of February 2025 — and the actual loss is likely higher because many cases go unreported.
Frauds evolve constantly — fake job offers, investment scams, hacked accounts, QR code traps, and AI-based voice scams are all becoming common. Experts warn that organised groups, including international fraud factories in Southeast Asia, are behind some of these operations.
What lies ahead?
The RBI governor’s remarks show a shift — from merely warning citizens to actively working on systems to trace and recover stolen funds.
With courts stepping in, the RBI coordinating with the Ministry of Home Affairs, and banks being pushed to respond in structured ways, the conversation is turning from helplessness to accountability.
The road ahead will depend on stronger bank fraud monitoring, faster response systems, clear legal rules on fund recovery and more citizen awareness.
For now, the RBI admits the challenge — recovery of stolen digital money is difficult but not impossible. And the fact that top courts, the central bank, and enforcement agencies are all seized of the matter is a sign that India’s fight against cyber fraud is entering a new phase — one where prevention and recovery go hand in hand.