New Delhi: Digital arrest scams have cost the economy roughly Rs 800 crore this year. On Thursday, the Supreme Court began putting a price on the bank's share of that.
A bench of Chief Justice Surya Kant and Justices Joymalya Bagchi and J V Mohana was hearing a suo motu case on the frauds, in which callers pose as CBI or ED officers and hold people hostage on video calls until they transfer money. The court said it would first examine the RBI's proposed Know Your Customer Amendment Directions, 2026, which are to be notified by November 30 and operational by December 31.
The order lays down the principle it wants written into those rules: financial institutions must indemnify victims with compensation not less than the amount lost, wherever the fraud happened because the institution failed to exercise due diligence. The RBI has been told to place before the court, at the next hearing, a list of every authorised financial institution. Banks will not be impleaded one by one, the bench said; the directions will be notified for all of them.
Two preventive steps were repeated in the order. A transaction that looks unusual against an account's past record should be suspended temporarily, information about it should go automatically to the nearest police station, and a physical verification should follow to establish whether it is genuine. The court wants every financial institution mandated to do this.
The Directors General of Police of all states and Union Territories have been directed to submit details of FIRs registered in digital arrest cases, the state of those investigations and their suggestions on prevention, and to route the information to the Indian Cyber Crime Coordination Centre.
Arguments went both ways on whether the court should impose the liability itself. Attorney General R Venkataramani opposed it, saying the question of banks' liability belonged with the RBI, which would shortly bring its rules into force.
Amicus curiae, senior advocate N S Nappinai, told the court the scams have continued regardless, and cited a recent case in which a woman lost Rs 2.5 crore.
The Chief Justice asked how educated citizens were still being taken in. He also pressed on why safeguards do not fire the moment a suspicious transaction or a message demanding money appears. The Centre has told the court that banks flag suspicious transactions better than they did six months ago, that 9,400 accounts linked to WhatsApp, MeitY and DoT have been blocked, and that software is being built to spot accounts impersonating police or government agencies and warn consumers.