India's cyber fraud woes: RBI urges more banks to tackle mule accounts with AI

In a bid to combat the growing issue of cyber fraud, the Reserve Bank of India (RBI) is intensifying efforts to detect and stop the misuse of mule accounts. These accounts, used to launder illegally obtained funds, are becoming a significant concern for the financial sector. To address this, RBI's innovation arm, the Reserve Bank Innovation Hub (RBIH), is working closely with both public and private banks to expand the use of its AI-powered tool, Mulehunter.AI.

Mulehunter.AI, developed by RBIH, is already in use by two major public sector banks. The platform was created by analyzing patterns from 19 different fraud cases across multiple institutions, and is designed to detect suspicious activities such as sudden transactions in dormant accounts or multiple credits followed by a large debit.

Rajesh Bansal, CEO of RBIH, emphasized the tool's effectiveness in improving both the speed and accuracy of fraud detection compared to traditional methods. "While the old manual system had limited accuracy and took a lot of time, Mulehunter.AI has tripled the accuracy and significantly reduced detection time," Bansal explained.

As cyber frauds escalate, especially with large sums of money involved, banks have been urged to adopt more advanced technology. In response, RBI is pushing for wider AI adoption across the banking sector, with hopes that this will better address the rising fraud risks and protect digital financial transactions.

Earlier this year, RBI Governor Shaktikanta Das called for heightened vigilance and more robust customer awareness initiatives to curb such frauds. This urgency is underscored by data from the Indian Cyber Crime Coordination Centre (I4C), which revealed that cyber frauds caused a loss of approximately Rs 11,333 crore in the first nine months of 2024 alone.

To further the fight against digital fraud, financial tech companies like Bureau, Clari5, and Datasutram are also collaborating with banks to deploy AI tools that track and detect suspicious patterns, including mule accounts. The goal is to create a robust defense against cyber frauds that increasingly threaten both individuals and financial institutions.

As the financial sector continues to innovate with AI, the RBI is hopeful that these advanced tools will play a pivotal role in reducing fraud and enhancing security for digital transactions across India.