What to do if your Bank Account is Frozen by Police?

The article is written by: Abhiraj Jayant, Advocate (Partner at Obiter Dicta Legal Solutions LLP)

After demonetization and the Government of India’s push towards digital payments, an increasing number of businesses and individuals have shifted to accepting and transferring money through digital banking systems such as UPI, NEFT, and RTGS. While these systems have greatly improved convenience and efficiency, they are not without limitations. One of the unintended consequences has been a sharp rise in cyber and financial crimes in India.

Today, perpetrators of cybercrimes can execute sophisticated scams from virtually any remote corner of the country. Their victims may range from a corporate professional working in Gurugram to an unsuspecting small trader in Kerala. This growing menace has led to the establishment of Cyber Police Units and dedicated Cyber Police Stations. However, the absence of clear guidelines and standardized protocols from law enforcement authorities or the Reserve Bank of India has resulted in what is now being described as a “freeze epidemic.” Across the country, banks are increasingly freezing accounts indiscriminately, often acting solely on instructions issued by Cyber Police Units.

Even when the alleged fraudulent transaction involves a small amount, sometimes as little as a few hundred rupees, entire bank accounts are frozen. Account holders are unable to access their savings, company income, salaries, and everyday living expenses due to this kind of blanket freezing. Small business owners, professionals, independent contractors, and regular people who depend on continuous banking access for their livelihood have been disproportionately affected by this. Serious questions about proportionality, procedural justice, and the lack of explicit safeguards governing such activities are raised by this practice.

How to prevent your bank accounts being frozen?

Accept payments from only trusted sources. Don’t use your bank accounts for cryptocurrency or gambling apps.
If you are required to accept payments as part of your business, maintain a separate bank account for accepting payments. This account should be separate from the main bank account which has all your savings and/or capital. You could transfer the amount from the secondary account to the main account at the end of each week. This would limit your exposure/risk of the account being blocked.
Don’t reveal the bank details of your bank account to sources/contacts you don’t fully trust.

What are your legal rights if your Account is Frozen by the Bank ?

The powers of seizure as well as attachment are governed by sections 106 and 107 respectively of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS). These are the two provisions under which the Police can seize/ attach your bank account. However, it is to be noted that both the provisions are different in terms of the process.

The Police does have the power to seize any ‘property’ under Section 106 of the BNSS for preserving evidence. However, once the police have seized any such property, they are required to inform the Court having jurisdiction over the offence committed. So, if the complaint is being investigated and a seizure has taken effect, the local Magistrate of that district has to be informed of such seizure.

However, a division bench of the Bombay High Court (in the case 2025:BHC-NAG:12612-DB) Delhi High Court (in Malabar Gold and Diamond Limited Vs Union of India W.P.(C) 4198/202) and the Kerala High Court (in the case 2025:KER:39285) have opined that freezing/attachment of bank accounts is covered by Section 107 of the BNSS and not Section 106.

Under Section 107 of the BNSS, before the Police attach or debit freeze any bank account, they are required to obtain approvals at two levels: firstly, from the Superintendent of Police or Commissioner of Police and secondly, from the court exercising jurisdiction. Once the Court is informed about the proposed action, the Court gives an opportunity to the owner of the property to come forward within 14 days to give an explanation and if court is not satisfied with the submissions of the owner, only then an order of attachment is passed.

Your rights as an accused/ owner of the bank account:

To be informed about the details of the alleged crime
To ask for the copy of the complaint
To ask the details of the police station which is dealing with the investigation
Where attachment is being made under Section 107 BNSS, it should be with the permission of the court.
Where an account is being debit frozen, the entire account cannot be frozen. Only the amount being alleged in the complaint can be marked as lien. This principle has been reiterated by several High Courts.

Delhi High Court: Neelkanth Pharma Vs Union of India 2025:DHC:1214, Pawan Kumar Rai vs Union of India 2024:DHC:9776

Rajasthan High Court: Sayed Sarfaraj Vs Reserve Bank of India & anr. 2025:RJ-JD:51524, Sita Ram vs. Bank of Baroda and Ors(S.B. Civil Writ Petition No.22577/2025)

Guwahati High Court: Nepali Meat Cutting Shop Vs Bank of Maharashtra 2025:GAU-AS:16900

Your legal options if your account is frozen

What to do if your bank account is frozen by the police? Here are your legal options:

Application to the Magistrate: Accounts that are frozen illegally may be ordered to be unfrozen under BNSS.

Writ Petition to the High Court : for violations of basic rights (such as arbitrary denial of access to property) under Article 226 of the Constitution.

Conclusion

Cyber and financial crimes may be on the rise; however, this cannot justify investigations that cripple the financial stability or day-to-day functioning of citizens or corporations on the basis of vague, unsubstantiated, or even false allegations. Powers of seizure and attachment are intended to facilitate the administration of justice, not to operate as instruments of coercion or harassment.

While courts have intervened from time to time and evolved safeguards such as the doctrine of “limited freezing”, judicial intervention alone is insufficient. Considering the vast geographical expanse of the country and the attendant administrative and investigative challenges, there is an urgent need to formulate a clear, uniform, and binding standard protocol governing seizures and attachments in cyber and financial crime investigations. Currently the Supreme Court has agreed to hear a petition for formulating SOP for such cases, it is to be seen how these take shape and how effectively they are implemented.