Observing that banks must be made accountable to indemnify losses of victims of digital fraud, the Supreme Court on Thursday (October 29, 2026) said victims of offences like digital arrests should receive compensation of at least the amount lost if the fraud is found to have resulted from a failure of due diligence by the financial institution.
During the hearing, Attorney General R. The matter, titled In Re: Victims of Digital Arrest Related to Forged Documents, is being monitored by the Supreme Court as part of efforts to strengthen the country’s institutional response to cyber-enabled financial fraud. Venkataramani, appearing for the Centre and other authorities, informed the Court that reported digital arrest cases had declined by around 50% compared with the previous year, attributing the reduction to the Court’s intervention, coordinated action by government ministries and departments, and public awareness campaigns.
Directing the RBI to submit a list of all authorised financial institutions by the next date of hearing, the Bench said the Court would issue directions applicable to all institutions without necessarily impleading individual banks in the proceedings. The Court further said that it is the responsibility of banks to alert neighbouring police stations about unusual transactions involving customers who may be victims of digital arrest scams.
