The Supreme Court on Thursday expressed concern over the continued prevalence of “digital arrest” scams, questioning how even educated people continue to fall prey to fraudsters despite public awareness campaigns, media reports and judicial interventions.
“What kind of person you are in a democratic country if you think you are getting arrested on mobile? Hit the mobile on the wall and the arrest goes,” the CJI remarked while hearing a suo motu case concerning victims of digital arrest scams.
A bench comprising CJI Surya Kant, Justice Joymalya Bagchi and Justice V. Mohana was hearing submissions from Senior Advocate N.S. Nappinai, the amicus curiae in the matter, who submitted that such scams continued despite efforts to curb them. She referred to a recent incident in which a woman allegedly lost ₹2.5 crore to a digital arrest scam.
Expressing disbelief that people continued to be deceived by such tactics, the CJI asked: “What we are shocked about, why are people not realising? What is wrong with victims? Are they not normal persons? This is everywhere in the media.”
The amicus submitted that the fear of arrest often drives victims to comply with the demands of fraudsters. She also referred to psychological factors that may explain why people continue to fall for such scams despite repeated warnings.
The CJI said the Court was frustrated that even educated individuals were being duped and questioned what lessons such victims would pass on to the next generation. He also pointed out that people could verify the authenticity of purported court orders by checking the official websites of the courts concerned.
Also Read: Digital Arrest Scam: Supreme Court Directs RBI, States, I4C to Strengthen Fraud Prevention Framework
On the role of banks in preventing digital arrest frauds, Attorney General R. Venkataramani submitted that banks had become more effective in identifying suspicious transactions over the past six months. He submitted that discussions had been held with the Reserve Bank of India (RBI) on the issue and that the Indian Cyber Crime Coordination Centre (I4C) was working round the clock to address such frauds.
The CJI, however, emphasised that action after a fraud had occurred would not be sufficient.
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“Report will only be post-mortem. What about prevention? Moment a transaction comes, why can’t it be withheld?”
he asked.
The bench questioned why banks could not use customers’ transaction histories to identify unusual transfers and temporarily suspend transactions that appeared inconsistent with their normal financial activity. It also discussed whether banks should notify the local police station and undertake physical verification before allowing such transactions to proceed.
The CJI expressed concern over the alleged involvement of bank officials in some frauds, questioning why the RBI was consulting banks even as the Court was asking for safeguards to be implemented. The Attorney General clarified that action had been taken against officials wherever involvement was found and said it would be incorrect to suggest that every bank employee was colluding with fraudsters.
The Court also considered making financial institutions accountable for the losses suffered by victims when fraud occurred because of a failure to exercise due diligence.
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“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 Attorney General opposed imposing such liability through judicial directions, submitting that the question of banks’ liability should be addressed by the RBI. Justice Bagchi observed that strict liability could be imposed on financial institutions and that the RBI, as the regulator, would have to frame appropriate guidelines.
The Court said it would examine the proposed RBI (KYC) Amendment Directions, 2026, which are expected to be notified by November 30 and operationalised in December, before proceeding further with the proposed directions.
The bench indicated that the regulatory framework should require financial institutions to indemnify victims of digital arrest and other cyber frauds for at least the amount lost where the fraud was found to have occurred because the institution failed to exercise due diligence. It also emphasised preventive measures, including temporarily suspending unusual transactions and notifying the relevant police station, followed by physical verification to establish the transaction’s genuineness.
The RBI was directed to submit a list of all authorised financial institutions on the next date of hearing to facilitate the implementation of the proposed measures.