MP High Court orders AU Small Finance Bank to unfreeze account held over cyber complaint

The Madhya Pradesh High Court at Indore on 29 October 2026 ordered AU Small Finance Bank to unfreeze a customer's savings account at its Ratlam branch that had been frozen after a cyber crime complaint. The court directed that only the disputed amount of Rs 18,300, covering four entries, be kept aside in a fixed deposit, and that the account holder be allowed to operate the rest of the account.

What Happened

The account holder went to the High Court asking for the freeze to be lifted, saying Rs 18,300 had been put on hold and the whole account restricted. The petition also pointed out that three identified transactions came to Rs 13,200.

The court applied two earlier rulings of the same High Court. In one, from 2024, banks were told to keep only the amounts named by cyber crime agencies in fixed deposits rather than block whole accounts. In the other, an order of 27 July 2026, a bench at Jabalpur framed guidelines based on a Standard Operating Procedure issued by the Ministry of Home Affairs on 10 April 2026. Under those guidelines, police should ordinarily ask banks to freeze only the disputed amount, freezing a whole account only in exceptional cases with written reasons.

The court held that the disputed Rs 18,300 may be released only after a competent Judicial Magistrate passes orders within three months. If that does not happen, the account holder may withdraw it too, after informing the police. The bank may act on any fresh complaint about other entries, keeping the SOP in mind.

What It Means

For a customer whose account is frozen over a cyber crime complaint, the ruling shows the court treating a freeze of the whole account as excessive where the disputed sum is small and identifiable. The guidelines the court applied make the bank the first point of contact: it must upload a grievance on the government's CFCFRMS portal within seven days, the investigating officer should decide within 15 days, and the bank should carry out a release, preferably within 48 hours.

Account holders should first raise a grievance with their bank under this procedure. Victims of cyber fraud can report it at https://cybercrime.gov.in or on helpline 1930.

Source: High Court judgment