Financial cybercrime has made banks an integral part of the criminal justice system. Examine the adequacy of banks' preparedness in light of recent evidence.

The Status of Policing in India Report (SPIR) 2026 was prepared by Common Cause and Lokniti-CSDS. It surveyed 8,306 respondents in 16 States/UTs. It found that 13% of them had faced cybercrime, and that 54% of those victims had faced digital financial fraud [1]. Stolen money moves through the banking system, so banks now decide whether victims get justice. The evidence shows they are not yet fully prepared for this role.

Why banks are now part of criminal justice

• First responders: Banks freeze funds on alerts from CFCFRMS and the 1930 helpline, both run by I4C. This system has saved over ₹11,158 crore across 32.80 lakh+ complaints [3].
• Gatekeepers: Organised gangs use mule accounts to run illegal payment gateways [4]. Banks open these accounts and check their KYC.
• Deciders of liability: Under RBI's 2017 circular, the customer bears zero liability if they report within 3 working days. The bank must credit the amount back within 10 working days, and it must prove any customer fault [2].

Evidence of gaps in preparedness

• Slow blocking: Most victims went to their bank within 24 hours, yet many reported delays in blocking transactions [1]. Money passes through mule accounts within hours.
• Reluctance to accept liability: Victims say banks are reluctant to accept liability [1]. Scams where the victim is tricked into sharing an OTP can be labelled "customer negligence", which removes the protection [2].
• Poor support: Victims are left to find their own way through complex systems [1].
• Old problem: Digital transactions already made up 44.66% of complaints to the RBI ombudsman in 2019-20 [6]. Redress after the loss has not changed how banks act when fraud first happens.

Areas of progress

• The I4C–RBIH MoU shares I4C data to train AI tools such as MuleHunter.AI to detect mule accounts [5].
• CFCFRMS recoveries show that coordination between banks and police works when banks act quickly [3].

Way forward

• Set a deadline in hours for banks to act on 1930 alerts, with penalties for missing it.
• Clearly cover scams where victims are tricked into paying. Make the receiving bank share the loss when a mule account is proved.
• Run AI-based mule detection in every bank, including co-operative banks.
• Publish bank-wise freeze times and recovery rates.

Banks now act as first responders, gatekeepers and deciders of liability, but SPIR 2026 shows their practice trails the rules they work under. Time-bound duties, clear liability rules and mule detection in every bank would turn them into reliable partners in justice. That would protect trust in digital payments and the right to an effective remedy.