RBI Governor Malhotra Calls for Collaboration to Curb Digital Frauds
9 Jan 2026 8:58 PM IST9 Jan 2026 8:58 PM IST
RBI Pushes Joint Action Against Digital Fraud and Risk in Banking
RBI Governor Sanjay Malhotra
Mumbai: The Reserve Bank of India (RBI) governor Sanjay Malhotra on Friday called for a collaborative effort between the central bank and the regulated entities to protect customers from the menace of rising digital frauds. He called on banks and other regulated entities to build analytics and tools to detect mule accounts and suspicious transactions timely and pre-emptively.
In his keynote address ‘Regulation and Supervision, adapting to the Digital Age’ at the Third Annual Global Conference of the College of Supervisors, Malhotra said, “A key element of this endeavour (customer centricity) should be to protect customers from the menace of rising digital frauds, which has engaged national attention.”
He said that while banks and other regulated entities individually should continue to improve their tools, techniques and processes in preventing and tackling digital frauds, this is an area where regulated entities need to collaborate with each other to build analytics and tools to detect mule accounts and suspicious transactions timely and pre-emptively.
“For all of us, protecting customers’ interest is not just a priority – it has to become the cornerstone of a sustainable and resilient financial system.”
He said that while digital channels help improve inclusion and convenience, without guardrails, they can also facilitate opaque pricing, weak disclosures and inappropriate recovery practices. The aim should therefore be to ensure that digitalisation and innovations are aligned with fair outcomes for consumers.
According to the RBI report on ‘Trends and Progress of Banking in India 2024-2025’ at the end of September, banks reported a total of 5,092 frauds, significantly lower than 18,386 frauds reported in the year-ago period. However, the value of frauds rose to ₹21,515 crore from ₹16,569 crore during April-September.
On supervisory action and enforcement, the governor said that the purpose of enforcement actions undertaken by the Reserve Bank is generally not punitive. "The intent is largely to correct. They serve two purposes - (i) signal to those against whom such measures have been initiated; and (ii) make others aware of our acceptable standards of conduct and expectations."
He said that financial institutions need to imbibe the spirit of regulations, rather than just 'tick-box-based compliance culture.'
"The regulators and the regulated are in the same team and not opposite camps. We are partners in the nation's development. Therefore, we have to work together to strike the right balance between growth and systemic stability on the one hand and between responsible innovation and consumer protection on the other hand," he said.
The governor said regulated entities need to better understand regulatory expectations and requirements, particularly in the areas where models, partners, data, and digital delivery create new forms of risk.
Malhotra said regulation and supervision must remain risk-based, proportionate, and technology-neutral. Accountability must remain human, and automation should not dilute accountability, he added.
"The regulators and the regulated are in the same team and not opposite camps. We are partners in the nation's development. Therefore, we have to work together to strike the right balance between growth and systemic stability on the one hand and between responsible innovation and consumer protection on the other hand," he said.
The governor said regulated entities need to better understand regulatory expectations and requirements, particularly in the areas where models, partners, data, and digital delivery create new forms of risk.
Malhotra said regulation and supervision must remain risk-based, proportionate, and technology-neutral. Accountability must remain human, and automation should not dilute accountability, he added.
( Source : Deccan Chronicle )
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