The Supreme Court has said that it is the responsibility of banks to protect customers' money. A bench headed by Chief Justice Surya Kant made this comment on Thursday. The Suo Motu case related to 'Digital Arrest' is being heard in the Supreme Court. During the hearing, the court said that if the bank is found lacking in necessary investigation in a cyber fraud case, then it should compensate the victim for the loss. The Supreme Court is considering making rules in cases of digital fraud. The court wants to fix the accountability of financial institutions in such cases.
Digital arrest is a new method of fraud. In this, thugs pretending to be police or government officials make video calls and extort money from people. During the hearing, the Chief Justice said that the country has suffered a loss of about Rs 800 crore this year due to digital arrest. Now the Supreme Court is emphasizing on the question that if a customer is defrauded due to the negligence of the bank, then who will compensate for his loss.
Bank will have to alert on suspicious transactions
The Supreme Court believes that it is the responsibility of banks to keep an eye on unusual transactions taking place in customers' accounts. Chief Justice Surya Kant said, 'You cannot identify cyber fraud happening in big companies. But if a common person usually withdraws Rs 10 to 20 thousand and suddenly Rs 50 thousand or more is withdrawn from his account, then the bank should investigate it.
The Chief Justice raised the question that if the transactions of a big businessman are monitored differently, then how can sudden large transactions in the account of an ordinary customer be ignored? The court emphasized on measures like identifying suspicious activities, verifying transactions if necessary and informing the concerned authorities.
Consideration of compensation if bank's fault is found
The court made it clear that banks have an important role in protecting customers from cyber fraud. If the bank fails to fulfill its responsibilities and its negligence causes loss to the customer, then the bank may have to face legal action along with compensation. The Chief Justice said, 'Our proposal is that wherever such fraud takes place, the bank should compensate the loss suffered by the victim and prosecution action should also be taken against it. This has to be done.
However, the court has not yet given the final order to give compensation to the bank in every cyber fraud case. At present, consideration is being given to making such a system in which if the negligence of the bank is proved, the loss suffered by the victim can be compensated.
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'Loss of Rs 800 crore due to digital arrest'
During the hearing, Attorney General R. appearing on behalf of the Central Government. Venkataramani said that compared to last year, there has been a decline of about 50 percent in the registered cases of digital arrest. He attributed this to the intervention of the Supreme Court, coordination between government departments and awareness campaigns.
Chief Justice Surya Kant said that despite the decline in cases, the country has suffered a loss of about Rs 800 crore this year due to such crimes. The court also expressed concern over the use of Mule accounts. Such bank accounts are used to receive money obtained through cyber fraud and then send it to other accounts.
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List of financial institutions sought from RBI
The Supreme Court has asked the Reserve Bank of India (RBI) to submit the list of all authorized financial institutions. The court wants to decide which institutions the proposed guidelines will apply to and what arrangements can be made to provide compensation to the victims.
The bench will also consider RBI's proposed KYC Amendment Directions, 2026. Its purpose is to see how the investigative responsibilities of financial institutions can be strengthened.
In this case, the Supreme Court's emphasis is not only on taking action after fraud, but also on saving people's money by identifying suspicious transactions in time. If the proposed system is implemented, it may strengthen the way for compensation to those who are victims of cyber fraud due to the negligence of the bank.