Don’t Build Speed Bumps on India’s Digital Expressway

The Reserve Bank of India’s recent signal that it may introduce a one-hour delay for instant payments reflects a classic case of treating the symptom while ignoring the disease. In an era where India’s Unified Payments Interface and IMPS are a global benchmark for speed and inclusion, apart from the two-decade-old RTGS system, introducing deliberate friction is not just a step backwards; it signals institutional fatigue in addressing the real problem.

The logic behind the "cooling-off period" is simple: give victims time to realise they’ve been conned. But this fundamental premise ignores the mechanics of modern fraud. Scams like "digital arrests" or fraudulent investment schemes don’t happen in a vacuum of seconds; they are psychological marathons. Victims often spend days, or even weeks, groomed by fear and greed, willingly transferring funds across multiple sessions. A sixty-minute delay won’t break a spell that has been cast over a fortnight.

By slowing down the system, we are not stopping criminals. We are inconveniencing millions of legitimate users while leaving the root causes of fraud largely untouched.

Speed Myth
The real issue is not transaction speed. It is the anonymity and ease with which mule accounts are created and operated. These accounts form the backbone of the fraud ecosystem and are often enabled by weak Know Your Customer processes at the onboarding stage. If a bank permits a fraudulent account to exist, the speed of the payment becomes irrelevant.

Instead of diluting instant payments, regulators and banks should move towards a trust-first architecture or a five-point blueprint for real security:

First, banks must move beyond legacy systems and manual reviews. Near real-time AI systems should identify suspicious patterns, such as dormant accounts suddenly receiving and dispersing large volumes of funds, typical of mule accounts before money exits the system.

Second, India needs a centralised, interoperable ‘kill switch’ mechanism that allows a victim to freeze their credentials instantly. A single trigger should alert both the sending and receiving institutions across the network.

Third, a real-time, integrated registry of flagged accounts is essential. Once an account is identified as fraudulent anywhere in the system, it should be immediately restricted across all participating institutions.

Fourth, accountability must be embedded into the system. If weak KYC processes enable mule accounts, the recipient banks should face meaningful financial penalties. When institutions face clear economic consequences, onboarding standards will improve.

Lastly, India has built world-class payment infrastructure. It now needs equally robust grievance infrastructure. Filing a fraud complaint should be as seamless as making a payment, with immediate provisional holds placed on disputed funds.

Digital India was built on the promise of frictionless commerce. Introducing mandatory delays is a blunt response that overlooks both human behaviour and technological capability. Instead of slowing down the system, the focus should be on strengthening institutional accountability and deploying advanced, real-time safeguards.

India does not need speed bumps on its digital expressway. It needs a far more capable and responsive highway patrol.