RBI Plans Risk Scores for Digital Transactions to Crack Down on Payment Fraud

The Reserve Bank of India (RBI) is preparing a major new framework aimed at strengthening the country’s digital payment security system. Under the proposed mechanism, every digital transaction could soon receive a “risk score” to help detect suspicious financial activity in real time.

The move comes amid rising incidents of cyber fraud, online banking scams, and misuse of bank accounts by cybercriminals across India’s rapidly expanding digital payments ecosystem.

Officials say the new system will help consumers, banks, and financial institutions identify risky transactions faster and improve fraud prevention capabilities across the banking sector.

RBI Tightens Rules Against Digital Payment Fraud

According to the latest developments, RBI is working on a system where digital banking transactions and accounts will be evaluated using risk-based intelligence mechanisms.

The objective is to:

• Detect suspicious transactions faster
• Identify fraud-linked accounts
• Reduce cybercrime-related money movement
• Improve customer safety in digital banking

Under this framework, banks and financial institutions may receive alerts or risk indicators linked to potentially suspicious accounts and transactions.

Experts believe such technology-driven monitoring systems are becoming essential as India witnesses explosive growth in:

• UPI payments
• Mobile banking
• Digital wallets
• Instant account transfers
• QR-code-based transactions

Focus on “Mule Accounts”

One of the primary targets of the RBI initiative is the growing misuse of “mule accounts.”

In cybercrime terminology, mule accounts are bank accounts used by fraudsters to transfer or temporarily store illegally obtained money in order to hide the original source of funds.

Just as a mule carries goods from one place to another, these accounts are used to move fraudulent money across multiple layers, making cybercriminals harder to trace.

Fraudsters often use:

• Dormant accounts
• Accounts opened using fake details
• Accounts controlled through social engineering
• Individuals unknowingly participating in scams

to route stolen funds.

What Is MuleHunter.ai?

To tackle this problem, RBI’s innovation ecosystem has developed an AI-powered system called MuleHunter.ai.

The tool has reportedly been created jointly by the Reserve Bank Innovation Hub and the central government to identify suspicious banking behaviour in real time.

The system uses:

• Artificial intelligence
• Machine learning algorithms
• Transaction pattern analysis
• Behaviour-based fraud detection

to detect accounts that may be linked to money laundering or cybercrime.

According to reports, the system continuously analyses transaction patterns and flags unusual account behaviour that may indicate mule account activity.

How the AI Tool Works

Unlike traditional rule-based fraud detection systems, MuleHunter.ai reportedly relies on advanced machine learning models that improve detection accuracy over time.

The AI system can:

• Analyse large transaction datasets
• Detect hidden fraud patterns
• Identify abnormal money movement
• Flag suspicious account behaviour faster

Experts say such AI-driven models can outperform conventional systems because they adapt dynamically to changing fraud techniques.

Shared Registry of Suspicious Accounts Planned

Another major part of the initiative involves the creation of a shared registry of suspicious bank accounts.

This infrastructure is expected to be managed by the Indian Digital Payment Intelligence Corporation (IDPIC).

The registry may allow participating banks to:

• Share information on suspicious accounts
• Detect repeat fraud patterns
• Block risky accounts faster
• Coordinate anti-fraud action across institutions

Some banks have already reportedly joined the pilot infrastructure.

Public Sector Banks Have Already Tested the System

According to reports, two major public sector banks have already conducted pilot testing of the AI tool.

Officials reportedly observed encouraging results during early trials, particularly in:

• Faster detection of suspicious accounts
• Better fraud pattern recognition
• Reduced false alerts

The RBI is now encouraging more banks to adopt the technology to strengthen cybersecurity across the banking ecosystem.

Why RBI Is Taking This Step

India’s digital payments market has expanded rapidly over the last few years, especially through:

• UPI transactions
• Instant mobile payments
• Small-ticket digital transfers

However, the rise in digital adoption has also led to increased cyber fraud cases involving:

• Fake investment scams
• OTP fraud
• Loan app fraud
• QR code scams
• Social engineering attacks

Cybercriminals increasingly rely on mule accounts to quickly move stolen money before authorities can trace the transactions.

The RBI’s new framework aims to make such operations more difficult.

Many People Become Mule Account Holders Unknowingly

Experts warn that many individuals unknowingly become part of mule account networks.

Scammers often lure people with:

• Work-from-home offers
• Easy commission schemes
• High-return promises
• Requests to receive and transfer money temporarily

Victims sometimes allow their bank accounts to be used without fully understanding the legal consequences.

Financial experts caution people never to:

• Share bank credentials
• Allow unknown persons to use their accounts
• Transfer money on behalf of strangers
• Open accounts for suspicious schemes

Risk Scoring Could Improve Consumer Safety

The proposed risk-scoring mechanism could significantly improve digital transaction safety for ordinary users.

Experts believe future systems may allow:

• Real-time fraud warnings
• Transaction safety indicators
• Faster account freezing
• Better scam detection

As India continues moving toward a cashless economy, regulators are increasingly focusing on AI-based monitoring systems to protect consumers and strengthen trust in digital financial infrastructure.