Reserve Bank of India Governor Shaktikanta Das has issued a stern warning to banks about the rising threat of mule accounts, urging them to bolster their cybersecurity measures to combat digital fraud.
At a meeting with public and private sector bank heads at the Mint Road headquarters, Das emphasised the need for robust cybersecurity controls and effective management of third-party risks. He stated, ‘Banks must step up their efforts against ‘mule accounts’ and also intensify customer awareness and education initiatives, among other measures, to curb digital frauds.’
Mule accounts are bank accounts used to receive or transfer illegally acquired funds on behalf of others. Individuals can become money mules either intentionally or unintentionally, often lured by fraudsters with offers to share or rent their bank account details.
Governor Das also noted the continued improvement in banks’ asset quality, loan provisioning, capital adequacy, and profitability. While acknowledging the sector’s increased resilience, he stressed the importance of further strengthening governance standards, risk management practices, and compliance culture.
These discussions are part of the RBI’s ongoing engagement with the senior management of regulated entities. The meeting was also attended by Deputy Governors M Rajeshwar Rao and Swaminathan J, along with executive directors in charge of regulation and supervision.
A post-event statement from the RBI highlighted discussions on various credit market issues, including the gap between credit and deposit growth, liquidity risk management, asset liability mismatches, trends in unsecured retail lending, cybersecurity, third-party risks, digital frauds, and the need to strengthen assurance functions. Other topics included credit to MSMEs, increasing the use of the rupee for cross-border transactions, and banks’ participation in RBI innovation initiatives.
According to media reports, at least five leading domestic banks are actively tracking money mule transactions and blocking such accounts. HDFC Bank was the first to investigate and take action on suspected cases in September 2023.
