New Delhi: There is good news for victims of digital fraud.
The Supreme Court said on Thursday banks must be held accountable for losses suffered by individuals due to digital fraud.
Observing that protecting those victims is the responsibility of financial institutions, the top court asserted that victims of offences such as digital arrest scams should be compensated for at least the amount lost if the fraud is found to have resulted from a failure of due diligence by the bank.
A bench comprising Chief Justice of India (CJI) Surya Kant and Justices Joymalya Bagchi and V Mohana, hearing a PIL taken up on its own initiative, pointed out that victims had lost Rs 800 crore so far this year despite cybercrimes falling by 50 per cent.
The apex court underlined the need for mandatory preventive measures such as suspending unusual transactions that deviate from an account holder’s transaction pattern, automated reporting of suspicious activity and physical verification to establish the genuineness of transactions.
The bench said the proposed Reserve Bank of India (RBI) regulatory framework these provisions.
“It is your duty as bankers to protect victims. What is the competent authority doing?” the Chief Justice asked during the hearing.
“Maybe you cannot flag transactions by big companies, but shouldn’t a transaction be flagged when a person who usually withdraws only Rs 10,000 or Rs 20,000 at a time suddenly withdraws Rs 50,000?” he added.
“We are proposing to direct that wherever such fraud takes place, bank will compensate victim and suffer prosecution. It has to be done,” the CJI said.
The bench will examine the proposed RBI Know Your Customer (KYC) Amendment Directions, 2026, before permitting the regulatory process to proceed.
The directions are proposed to be notified by November 30, and operationalised by December 31.
The Supreme Court expressed disappointment over continued instances of digital arrest scams, with CJI Kant questioning how educated citizens continue to fall prey to such frauds.
“What are they afraid of with digital arrest? It’s something wrong with fear psychosis. How are people getting trapped like this? Someone tells you on the mobile that you’re arrested you agree you’re arrested? In a country like this, how are you becoming victims like this? What will you pass on to the next generation of you become a victim at this age?” the CJI asked.
