In a strong push to curb growing cyber fraud, VC Sajjanar has urged the Reserve Bank of India to introduce key reforms in the banking system to dismantle organised cybercrime networks.
In a letter addressed to RBI Governor Sanjay Malhotra, the Commissioner highlighted how loopholes in banking processes are enabling fraudsters to create mule accounts using the identities of unsuspecting individuals. These accounts are widely used to move illegal funds.
The concerns are based on findings from Operation Octopus, a major investigation by the city police. The probe revealed serious gaps in KYC verification at branch levels and exposed cases of negligence and alleged collusion between bank staff and cybercriminals.
The Commissioner recommended strict accountability for branch-level officials and called for a system-wide audit to ensure proper KYC compliance. He noted that current enforcement measures are not strong enough to prevent fraudulent account creation and related financial crimes.
He also cited a case at the Nashik branch of IDFC First Bank, where a KYC verifier misused a colleague’s credentials to create mule accounts for commissions. Such incidents, he said, point to deeper structural issues, especially in private banks.
To address this, the Commissioner proposed that any bank employee arrested or chargesheeted in cybercrime cases should be reported to the RBI and permanently blacklisted. He also suggested forming a Joint Working Group with members from RBI, banks, and police to regularly review and tackle mule account-related fraud.
The letter further emphasised the need for banks to adopt advanced technology for real-time monitoring of suspicious transactions. Stronger detection systems can help identify unusual activity early and prevent misuse of accounts.
In addition, the Commissioner issued a public advisory warning citizens about fake investment ads on platforms like WhatsApp and Telegram. He clarified that law enforcement agencies do not conduct investigations through video calls or demand money under “digital arrest” claims. He also warned against renting out bank accounts for commissions, stating that account holders will be held responsible for misuse.
Victims of cyber fraud were urged to report incidents within the golden hour by calling 1930 or visiting the official cybercrime portal, as early reporting improves chances of fund recovery.
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