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Renting of bank accounts, an illegal activity, is flourishing through personal and social media-led arrangements. They bait account holders with promise of quick and easy money but put them at risk of criminal charges and large financial claims.

Moneycontrol spoke to people who are looking to rent bank accounts and to those who are offering their bank accounts for rent to understand why such arrangements are made, how people are compensated and what the risks are.

What is bank accounting renting?It is simply offering one's bank account for use by another. The renter is either paid a lump sum or paid in instalments over varying time periods.

The account holders are promised 1 percent to 5 percent of the funds that are transacted via their accounts, or a large one-time payment, based on conversations this reporter had with people who have rented out their accounts. A percentage of the funds is usually offered when the bank accounts are being used only for a few days, where the fraudsters will offer to pay 1-5 percent of the funds being held in these accounts. Usually, these transactions involve large sums, say, Rs 1 crore, and hence the account holder is promised a payout of Rs 50,000 or Rs 1 lakh per day. Lumpsum payments quoted by fraudsters were much smaller, between Rs 20,000 and Rs 50,000, but they promised payment upfront.

Sometimes fraudsters offered added compensation, such as covering travel and stay expenses for face-to-face transactions. These would involve the account holder having to withdraw the money and travelling to the destination specified to make the payment in person.

The fraudsters are known to approach those they know are in dire need of money, for example, someone who has lost their job and has to meet a big expense like a hospital bill. Or they could use social media to approach small businessmen who are in urgent need of funds to tide over a bad patch.

The operators ask them to share the log-in details of their bank account and mail them the SIM card connected to the account, to which one-time passwords (OTPs) are sent. The account holders opt for an alternative number for their daily use.

What are these accounts used for?

These accounts are then used by criminals such as stock market scamsters or money launderers to move funds around.

One person who has rented out his account once before told this reporter that bank accounts are taken largely for three purposes: one, for routing "gaming money", two, for routing stocks-related hot money and three, mixed use, which is for both. Account holders are told that "gaming money" is what people have won by playing online real-money games and what they want hidden from the income tax department. The person said that the first category or gaming money is the safest of the all three and that a renter should stay away from stock scam-related and mixed-use arrangements even if the payout is higher.

In reality, account holders are always in the dark about the source of the funds. They will have no way of knowing if their accounts are holding laundered money or profits earned from running a pump-and-dump scam in the stock market or earned by offering illegal investment advice or any other illegal activity.

There are various orders issued by the Securities and Exchange Board of India (SEBI) in which noticees (or people who were investigated) claim that they were not aware that their bank accounts were being used to collect proceeds from pump-and-dump operations or from running illegal investment advisories. These people claim that they had rented out their account to a person they knew, perhaps an employer or a family friend, during a time of financial distress.

On April 23, 2025, SEBI issued an order directing Real Capital Services and two associates to refund fees collected for unregistered investment advisory services. The second associate, Kirthibhai Chavda, who was asked to return nearly Rs 50 lakh, claimed to have no part in the business. Chavda, whose bank account was used to collect fees for the service, said that he was working as a delivery boy for a salary of Rs 12,000 per month when the pandemic struck and he suffered a fracture from an accident. Desperate for money, he claimed, he rented out his bank account for Rs 5,000.

What accounts are usually rented?Fraudsters typically look for current accounts with cash-management products (CMPs) or cash management services (CMS) and/or merchant QR (MQR) codes. CMP or CMS makes bulk payments easier by allowing one-click payments to multiple accounts. Accounts with MQR codes are also used for ease of transaction.

What are the risks from this?The risk is entirely borne by the account holder.

He or she could face charges of money laundering or for running scams. According to a legal expert, penal action from regulators such as SEBI could depend on a case-by-case basis. For example, in the Real Capital Services case, they asked Chavda to refund the money because he could not provide proof to substantiate his claims and his bank account showed credits towards investment advisory services.

Account holders could also be cheated financially since in many cases the fraudsters ask them to place a deposit in the bank account to maintain a minimum balance. Then they vanish with that amount and the account holder is left with no legal recourse.

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