Alarmed by the digital fraud crisis, the Supreme Court has ordered the Centre to formulate a robust SOP, emphasising the need for banks to proactively prevent cybercrimes and protect vulnerable customers from digital arrest scams

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The Supreme Court on Monday described the siphoning of over Rs 54,000 crore by digital frauds as absolute “robbery or dacoity” and asked the Centre to draft a standard operating procedure in consultation with stakeholders like the RBI, banks and the Department of Telecommunications to deal with such cases.

The top court also expressed grave concern over the “menace” of digital arrest scams and said banks must play a proactive role in preventing cyber-enabled fraud.

A bench comprising Chief Justice of India Surya Kant and Justices Joymalya Bagchi and N V Anjaria observed that banks have a fiduciary responsibility to alert customers when unusual, large-scale transactions occur in accounts typically used for sending or receiving small amounts.

It said that when a retiree, who withdraws amounts in the range of Rs 10,000 or Rs 20,000, suddenly withdraws huge amounts, then the bank should issue an alert.

Observing that the amount siphoned off by digital fraud is more than the budgets of many small states, the top court noted that such offences may be due to either collusion by or the negligence of bank officials, and stressed the need for timely actions from the RBI and the banks.

It directed the CBI to identify digital arrest cases and asked the Gujarat and Delhi governments to accord sanction to the federal probe agency to proceed with the investigations in identified cases.

The Supreme Court also asked the Reserve Bank of India (RBI), the Department of Telecommunications (DoT), and others to jointly hold a meeting to come up with a framework for providing compensation in digital arrest cases.

A pragmatic and liberal approach is needed to deal with the award of compensation to digital arrest victims, the top court said, and posted the plea for further hearing after four weeks. It asked the authorities to file fresh status reports before the next date of hearing.

At the outset, Attorney General R Venkataramani informed the bench that RBI has drafted a Standard Operating Procedure (SoP) for banks to deal with such cases and it, among other things, prescribes action by the banks where temporary debit holds can be placed to prevent cyber-enabled frauds.

Issuing a slew of fresh directions, the bench asked the Ministry of Home Affairs to formally adopt the RBI’s SoP and issue directions for its implementation across the country.

Senior advocate N S Nappinai, appearing as an amicus curiae, said banks should be asked to issue alerts to customers about suspicious transactions, and AI tools can be used for this purpose.

“If there is a business entity with crores of transactions, it may not raise suspicions. But there is a pensioner, who (generally) withdraws Rs 15,000-Rs 20,000; suddenly from his account, Rs 50 lakh, Rs 70 lakh, Rs 1 crore is being withdrawn, then why did your AI-operated tools in the bank not deem it fit to alarm him that this transaction is suspicious?” the bench posed.

The attorney general said that RBI will address the issue.

“The problem is banks are more into business mode, and naturally so. And in doing that, what they are becoming, either innocently or connivingly, platforms through which there is a swift and seamless transmission of stolen proceeds of crime,” the Supreme Court bench said.

Concerns Over Bank Practices

Justice Bagchi said the MHA’s report itself flagged that over Rs 52,000 crores have been misappropriated between April 2021 and November 2025 through cyber fraud.

“These banks are becoming a liability. Banks should know that they are a trustee of the money, and they should not get overexcited with it. That trust should not be broken. The problem is these banks give loans to these fraudsters and then NCLT, NCLAT (comes into the picture when the fraudulent companies become embroiled in insolvency disputes) etc,” the CJI said.

The remark was made when the attorney general told the court that mule bank accounts were detected while implementing measures put in place by the RBI.

On December 16, the bench asked the Centre to look into the suggestions put forward by the amicus curiae in ensuring compensation to victims of digital arrests, while voicing its concern over the enormous amounts taken out from the country by cyber criminals.

Understanding Digital Arrest Scams

Digital arrest is a growing form of cybercrime in which fraudsters pose as law-enforcement officers, court officials or personnel from government agencies to intimidate victims through audio and video calls. They hold the victims hostage and put pressure on them to pay money.

On December 1, the top court asked the CBI to carry out a unified pan-India probe into digital arrest cases, and asked the RBI why it is not using artificial intelligence to trace and freeze bank accounts used by cyber criminals.