India’s growing dependence on digital payments has exposed a serious fallout for ordinary citizens, as a cyber fraud investigation has led to mass freezing of bank accounts across the country.
A ₹4.43 crore cyber fraud case registered in Faridabad has resulted in more than 36,000 bank accounts being frozen nationwide. Alarmingly, many of the affected account holders have no direct link to the fraud. Their accounts were blocked simply because small portions of the stolen money passed through them during routine transactions.
Sitting at his household goods shop in Mumbai’s Andheri West market, Sudhir shared his experience. “A customer transferred ₹826 to me via UPI. Two days later, the bank sent a message saying my account was frozen because the funds were linked to a cybercrime. I’ve been running from pillar to post for over a month now to get it reopened,” he said.
Sudhir said it is impossible for a small shopkeeper to know whether a customer’s digital payment is linked to a scam. Police later confirmed he had no involvement in the fraud, and local police even wrote to the bank recommending restoration of his account. However, the process remains pending.
The case is being investigated by the NIT Cyber Police Station in Faridabad. So far, 9 people have been arrested. Investigators identified them as key members of the fraud network who knowingly used fake or compromised bank accounts to circulate stolen funds.
After the victim reported the fraud through the National Cyber Helpline 1930, an automated fund tracing system under the Union Home Ministry flagged and froze every account linked to the money trail. This happened before verifying whether the account holders were involved in the crime.
As a result, traders, vendors, fuel station owners, and small business operators suddenly lost access to their bank accounts.
According to NIT Police Station in charge Jitendra Kumar, 10 to 12 requests are received every week from citizens seeking account restoration. “People come crying. Some had only ₹200 or ₹500 transferred to their accounts, yet the banks froze them. A few have even approached the High Court to get their accounts reopened,” he said.
Complaints have come in from Uttar Pradesh, Bihar, Rajasthan, Madhya Pradesh, Maharashtra, Gujarat, West Bengal, Delhi, Himachal Pradesh, Uttarakhand, and Karnataka.
Faridabad Police have written to the Union Home Ministry seeking a review mechanism. They have suggested a tiered process to distinguish between fraud participants and innocent recipients. Until further directions, banks have been instructed not to unfreeze any linked accounts.
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