'If This Is The Quality Of Banking...': SC Raps Banks Over Handling Of 'Digital Arrest' Fraud Cases

Last Updated:February 09, 2026, 16:14 IST

The Supreme Court also questioned why the RBI has not taken tougher policy measures despite reports suggesting that over ₹54,000 crore has been siphoned off abroad.

The Supreme Court on Monday strongly criticised banks for their handling of “digital arrest" fraud cases, questioning their professionalism and asking why suspicious transactions are not flagged in time, even as customers lose their life savings.

A bench led by Chief Justice of India Suryakant was hearing the matter after the Centre placed status reports filed by the Ministry of Home Affairs (MHA) and the Ministry of Electronics and Information Technology (MeitY) outlining steps to curb such cyber frauds.

The Attorney General informed the court that data on these cases is being compiled and standard operating procedures are under preparation.

Highlighting the human cost of such crimes, the CJI observed that losses cannot be viewed merely as statistics.

Also Read: How One ‘Kill Switch’ Button Could Crack Down On Digital Arrest Scams

For elderly couples and small depositors, he noted, the amounts siphoned off often represent their entire lifetime savings.

The court underlined that banks have a clear duty of care towards customers and questioned why red flags are not raised when suspicious transactions occur.

“If this is the professionalism and quality of banking they are showing, then it is serious," the CJI remarked, expressing concern over delays by both public and private sector banks in responding to customer complaints.

The bench asked why digital arrest transactions cannot be immediately frozen and alerts sent to customers as well as cybercrime police stations when unusual activity is detected.

The Attorney General told the court that discussions are underway to finalise SOPs specifically for handling digital arrest fraud cases and to fast-track responses.

While MHA and MeitY have submitted status reports, the Reserve Bank of India has also drafted an SOP detailing the steps banks should take upon receiving complaints.

Directing MHA to formally adopt and implement the SOP finalised on January 2, 2026, the court stressed the need to strengthen coordination among agencies to ensure recovery of stolen funds.

It also said High Courts should oversee compliance to prevent multiple, overlapping proceedings.

The amicus curiae assisting the court flagged systemic gaps, pointing out that banks often refuse compensation by claiming victims transferred money “voluntarily", an argument he said ignores the coercive nature of such frauds.

He added that while RBI’s AI-based “Mule Hunter" tool has been rolled out in 86 banks, other mandated safeguards, such as velocity checks to detect rapid fund movements, remain largely unimplemented.

The Supreme Court also questioned why the RBI has not taken tougher policy measures despite reports suggesting that over ₹54,000 crore has been siphoned off abroad.

The CJI asked whether such massive losses stem from negligence, collusion, or a reluctance to inconvenience customers.

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