New Delhi: The Supreme Court has called for stricter accountability from banks in digital arrest fraud cases, stating that victims should receive full compensation if negligence or failure to follow due diligence procedures by financial institutions enables the fraud.
During a hearing on October 29, 2026, a bench headed by Chief Justice of India Surya Kant asked the Reserve Bank of India (RBI) to include a mandatory liability clause in its proposed regulatory framework. The court warned that it would impose such a requirement through a judicial order if the RBI failed to incorporate it. Justices Joymalya Bagchi and V Mohana were also part of the bench.
The proceedings stem from a suo motu case initiated after an elderly couple allegedly lost Rs 1.05 crore to fraudsters who used forged court documents to deceive them.
The court also highlighted the need for preventive measures to stop suspicious banking transactions before money is transferred. It suggested temporarily blocking unusual transactions, automatically alerting nearby police stations and conducting physical verification before processing questionable payments.
The bench further indicated that bank employees found colluding with cybercriminals should face personal liability and criminal prosecution.
Attorney General R Venkataramani informed the court that the RBI was preparing a regulatory framework through proposed amendments to its Know Your Customer Directions, 2026. The draft is expected to address the responsibilities of banks and their officials.
According to data submitted by the Indian Cybercrime Coordination Centre and the Ministry of Home Affairs, 21,928 digital arrest complaints involving losses exceeding Rs 647 crore were reported during the first eight months of 2026.
The Supreme Court has sought the RBI’s draft framework and directed states to submit updates on FIRs registered in such cases. The matter is scheduled for further hearing before November 30.
