Allahabad High Court Seeks RBI Response on

The Allahabad High Court has issued notice to the Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI) regarding a plea for an 'accept or decline' option on incoming electronic payments. According to a report by LawTrend, the Lucknow Bench passed this order on August 24, 2026.

A Division Bench of Justice Rajan Roy and Justice Manjive Shukla heard the public interest litigation (PIL) filed by advocate Anupriya Agarwal. The Union government, represented by the Secretary of the Ministry of Finance, is also named as a respondent in the petition.

The Core Argument for Recipient Control

The petition challenges the existing framework for digital payments, which it argues lacks recipient-side control. It states that while payers can initiate and authenticate transactions, recipients generally have no transaction-specific choice before funds are credited to their accounts. The plea seeks directions for the RBI to frame guidelines mandating an 'Accept/Decline' mechanism.

Advocate Anupriya Agarwal links this proposed feature to customer protection, financial autonomy, and privacy. The petition also argues it would help prevent the misuse of electronic payment systems. It specifically addresses situations where account holders do not wish to receive particular payments.

The Problem of Innocent 'Mule' Accounts

The plea highlights how the current system can ensnare innocent parties in fraud investigations. A mule network is a method of transferring illicit funds through multiple bank accounts, including UPI. Accounts of people with no connection to the fraud can be used to send and receive these payments.

Several court cases illustrate the resulting disruption. HDFC Bank froze the account of Neelkanth Pharma Logistics over a transaction of Rs 200. The company held Rs 93.50 crore in the account, and the Delhi High Court found no connection to the investigation. In a separate instance, a chhole-bhature vendor's account was frozen over an alleged Rs 105 cyber-fraud transaction.

Kerala traders also had accounts immobilised after fraudsters transferred money through UPI. The Kerala High Court subsequently stated that freezes should target only the disputed sums, not entire accounts. The RBI itself recognises that money mules can sometimes be innocent third parties whose accounts face suspension.

Implications for the Payments Ecosystem

The case raises a fundamental question about control versus convenience in India's digital payment landscape. Systems like UPI are built for instant transfers, a feature hailed for its efficiency. Introducing a mandatory recipient approval step would introduce friction, potentially slowing down routine transactions.

However, the petitioner contends that such a mechanism would provide account holders a critical point of control. It could offer a defence against being involuntarily drawn into fraudulent schemes. The court's notice compels the RBI and NPCI to formally respond to these arguments. The outcome could shape the future architecture of digital payments in India.