Digital Arrest Fraud: Supreme Court Mulls Making Banks Pay Victims
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The Supreme Court on Thursday, 29 October, said it is considering directing banks to compensate victims of “digital arrest” scams and face prosecution where they failed in due diligence. A bench of Chief Justice Surya Kant, Justice Joymalya Bagchi and Justice V. Mohana, hearing a suo motu case on the fraud, floated the idea as the court was told that about ₹800 crore was lost to such scams this year, according to reports of the hearing. No formal order has been passed yet.
Banks May Have to Hold Suspicious Transfers
“We are proposing to direct that wherever such fraud takes place, bank will compensate victim and suffer prosecution,” the Chief Justice said, as reported by The Week. He also asked why an unusual transaction cannot be held back until it is verified, when banks now act only after a victim reports the loss. If the court adopts the proposal, a customer who is cheated by fake officials on a video call could claim the money back from the bank that processed the transfers.
Centre Wants RBI to Set the Rules
Attorney General R. Venkataramani opposed court-imposed penalties on banks and said the Reserve Bank of India should handle the matter. He told the bench that RBI’s proposed rules would soon come into force and that banks have become better at flagging suspicious transactions. Amicus curiae N.S. Nappinai cited a case in which a woman lost ₹2.5 crore.
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IPB News has earlier reported the scale of the fraud, with 21,900 complaints and ₹647 crore lost in 2026, and Prime Minister Narendra Modi’s warning on cyber attacks on banks at the RBI data centre opening in Jatni.
Court Order Awaits RBI Rules
The reports do not mention a date for the next hearing. What remains unknown is whether the court will wait for RBI’s rules or issue its own directions on bank liability first. More court coverage is on the Daily Updates page.
Source: Based on reporting by The Week and Outlook India. No court order is yet available.
Image: PTI.
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