Andhra HC: Merchant accounts can't be frozen over UPI payments received from fraudsters
The Andhra Pradesh High Court directed SBI to defreeze a liquor retailer's account frozen after receiving Rs 8.26 lakh in UPI payments linked to alleged fraud. The ruling limits payment-rail liability for merchants and reduces freeze risk for Indian retailers accepting UPI.
What happened
Andhra Pradesh HC ruled merchant bank accounts cannot be frozen merely for receiving UPI payments from alleged fraudsters, directing SBI to defreeze a liquor
Key facts
- Rs 8.26 lakh
- Rs 1,000
- Rs 2,294.79 crore
- Rs 0.57 crore
- 0.02%
Why this matters
The narrowing of merchant liability for fraud-linked UPI inflows strengthens the legal case for scaling UPI acceptance across retail footprints and de-risks payment infrastructure exposure in Indian expansion or acquisition plans.
What to watch
- RBI or NPCI circular clarifying merchant liability on tainted UPI credits
- Similar rulings in other High Courts (Karnataka, Delhi, Telangana)
- SBI appeal or Supreme Court escalation
- I4C/NCRP freeze-request volume statistics on merchant accounts
- Amendments to bank lien-marking practices tied to cybercrime FIRs
- Payment aggregators lobby RBI/NPCI for a standardized partial-freeze protocol to reduce merchant disruption
- Retailer associations circulate the judgment as a template for account-defreeze petitions
- Banks update internal SOPs to lien-mark disputed amounts rather than full accounts
- Legal teams at large retail chains build good-faith-receipt documentation trails