India has witnessed a digital revolution unlike any other in recent history. From bustling metro stations to remote villages, UPI, IMPS, and digital banking apps have become part of our daily lives. With over 130 billion UPI transactions in FY24, India has not just embraced digital payments — it has redefined them for the world.

From Rs 20 chai bills being paid with UPI, to gig workers receiving payouts in seconds, India is racing ahead as the world’s digital payments powerhouse . But as digital money has gone mainstream, cybercrime has followed with chilling sophistication. The crime scene has shifted from dark alleys to glowing mobile screens.

We are no longer dealing with clumsy phishing messages that scream “urgent.” Fraudsters now speak polished Hindi or English, impersonate police officers, bank managers, or RBI officials, and even use fake backdrops of law enforcement offices in video calls. Digital arrest scams have led people to believe they are wanted criminals and in deep trouble, unless they immediately transfer some money to the fraudster’s account.

Investment scams lure citizens with fake dashboards showing skyrocketing returns, and phishing messages stoke fears that our SIM cards or accounts would be blocked. The manipulation is emotional first, financial later.

But beneath this chaos lies a quiet, structured engine of ‘mule accounts’ — everyday bank accounts converted into digital laundromats for stolen money. Some account holders knowingly rent out or sell their accounts for a small commission. Others become accidental accomplices when lured with false job offers or payment processing gigs (receiving and paying monies). Once funds move through this web of mule accounts, tracing them becomes exponentially harder, and law enforcement often arrives after the money has vanished across borders.

The result? The value of banking frauds rose to a staggering 36,000 crore in FY25, and digital channels comprised a growing chunk of this. While many of these frauds are of low value, their cumulative impact is enormous. They erode confidence, especially among first-time digital users and vulnerable demographic groups. Trust, the core currency of a digital economy, starts to wobble.

When I led the Reserve Bank Innovation Hub, one of our core priorities was to address this erosion of trust in a manner that was proactive and systemic, rather than reactive. We understood that cyber fraud is not a bank-level problem but an ecosystem issue. That insight led to the development of MuleHunter, an AI-enabled framework trained to identify mule accounts across institutions by analysing behavioural anomalies rather than relying on traditional rule-based methods.

We also saw that despite multiple agencies actively tracking fraud — banks flagging suspicious transactions, the Indian Cybercrime Coordination Centre (I4C) aggregating fraud complaints, the Department of Telecommunications (DoT) monitoring suspect mobile numbers, and law enforcement agencies building case files — these organisations work in silos.

The intelligence exists, but it is fragmented. A phone number flagged by DoT may not be instantly visible to a bank’s fraud filters. A mule account reported in one institution may continue operating freely in another. I4C may detect a rising fraud pattern days before it triggers any systemic response. In cybercrime, delays equal losses, and disjointed systems create delay.

This led to the initiation of the Digital Payments Intelligence Platform (DPIP), a collaborative infrastructure led by the RBI where banks and payment companies can share real-time fraud intelligence, allowing early detection of emerging fraud rings.

DPIP aims to unify fraud signals across banks and payment players, converting scattered red flags into a coordinated early-warning system for real-time risk scoring. Yet, technology is only one part of the battle. The challenge ahead is equally sociological. We must understand why ordinary people participate in illegal account renting, how fear-based frauds exploit authority bias, and why even educated citizens fall prey to greed-triggered investment hoaxes. Cybercrime today blends psychology, economics, and digital engineering, and so must our response. India’s digital economy stands at a decisive moment.

If cyber fraud goes unchecked, it can chip away at our financial confidence and push entire segments of society back towards cash-based systems. But if we respond with the right blend of innovation, policy alignment, institutional collaboration, and ethical design, we can not only control the menace but also create global models for cyber fraud prevention.

As someone who has witnessed this transformation up close, I remain optimistic. Our financial institutions are no longer treating fraud as an afterthought. Regulators are embracing proactive digital defences and technologies like AI are beginning to work at the speed at which criminals operate. Most importantly, we are shifting from a posture of damage control to one of proactive detection. The fight against cybercrime is not about winning once — it is about staying ahead always. And in that journey, the trust of the Indian citizen is not just the goal but the foundation on which the future of our digital economy stands.

India can lead not just in digital payments, but in digital protection. Today’s frauds are dynamic, adaptable, and networked, and so must our defences be: combining smart humans, smart machines , shared intelligence, and informed citizens. The Innovation Hub’s work with MuleHunter and DPIP is only one step in the direction of building a systemic infrastructure so that digital arrests, phishing, investment scams, and mule-account networks are thwarted before they inflict widespread harm.

(This op-ed reflects my own views; the tools referenced are developed by the Reserve Bank Innovation Hub in coordination with the Reserve Bank of India and ecosystem partners).