Supreme Court Asks Reserve Bank of India to Frame Mandatory Rules Against Digital Arrest Fraud

Key facts

• A three-judge Supreme Court bench headed by Chief Justice of India Surya Kant, with Justices Joymalya Bagchi and V Mohana, pulled up the Reserve Bank of India (RBI) for soft pedalling on digital arrest fraud, described as the biggest financial fraud on the economy running into thousands of crores of rupees.
• The Supreme Court proposed directing that banks compensate victims of digital arrest fraud and face prosecution where failure of due diligence on their part resulted in the fraud.
• The Supreme Court sought a mandatory RBI provision requiring banks to suspend unusual transactions in an individual's account unless a complete verification protocol is followed.
• Attorney General R Venkataramani informed the court that the RBI was in advanced stages of operationalising guidelines to prevent digital arrest frauds, which would take effect by December 2026.
• Amicus curiae N S Nappinai informed the court of a digital arrest case in the previous week in which a person lost Rs 2.5 crore, and the court sought inputs from state police on prevention and prosecution of such cases.
• Prevention measures are being implemented at three levels: awareness, bank intervention, and RBI and MeitY rules, with operation targeted by December 2026.