According to three industry executives who spoke on the condition of anonymity, fraudsters are using the accounts of BCs, depositing money at their agent outlets and getting it transferred to multiple accounts through tranches and sometimes even to outside the country via Nepal.
In most cases, the final destination is a mule account, and the depositor is a fraudster who would have collected the funds from cybercriminals or fake crypto apps. As police investigate such fund movement, they freeze accounts on the money trail and BCs are becoming collateral damage in the process, industry insiders said.
“Every month we are seeing accounts getting frozen by cybercrime police departments and funds worth a few crores are getting stuck, which disrupts our business,” said one of the people. “While accounts get opened again after we appeal to the police department, the overall process takes weeks which creates a working capital problem for our business.”
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Usually, BCs have settlement accounts with banks which are used to transfer funds from one network to another. These accounts have funds collected from multiple agents from different parts of the country.
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Another executive said some of the players in the industry have reached out to the Indian Cyber Crime Coordination Centre (I4C) for help. The Business Correspondent Resource Council (BCRC), an industry body of these entities, has also written to law enforcement authorities explaining that BCs do not have control over such fraudulent fund transfers.“We want the police to freeze the disputed amounts and not freeze the entire account. Some of these conversations have happened at the highest level and we have been told that the (home) ministry is working on creating some standard operating procedure to save BCs from harassment,” said BCRC chief executive Dharanidhar Tripathy.
The industry has also reached out to the Reserve Bank of India and large commercial banks for help quickly unfreezing the accounts, but not much has moved beyond early conversations.
The first executive said once an account gets under scrutiny, multiple teams at the end of the partner banks get involved, making the process of unfreezing those accounts very complicated and time consuming.
“The branch manager informs the operations team, the bank’s legal team gets involved in the process, then the regional headquarter gets involved; so overall just to get the account up and running takes weeks,” the executive said.
The problem compounds in cases where the physical agent on the ground has been found to be an accomplice. The industry is also seeking to strengthen its agent onboarding processes to weed out rogue players.
The third industry executive said most of these fraudulent transactions were done via multiple accounts and payments were often done via Unified Payments Interface, which makes it difficult for banks or law enforcement agencies to exactly track the money flow and hold the actual culprits responsible.
“In some cases we have found that the ultimate beneficiary is a farmer who receives Jan Dhan support in the account, but someone hijacked the account through fraudulent means and the actual account holder had no idea about his account being used as a mule account,” he said.
