The Supreme Court directed the Reserve Bank of India to require banks to indemnify victims of "digital arrest" cyber scams within a new standard operating procedure. A bench led by Chief Justice Surya Kant highlighted probable insider complicity, noting fraudsters often know exact account balances. Banks will now be required to alert customers and law enforcement whenever transactions deviate from historical patterns. Amicus curiae V S Nappinai further recommended extending shared liability to telecom service providers handling these communications.
Key points
Banks face mandatory liability to compensate victims of digital arrest cyber frauds under…: Banks face mandatory liability to compensate victims of digital arrest cyber frauds under newly directed central bank regulations.
Judicial scrutiny has focused on potential banking staff collusion regarding unauthorized…: Judicial scrutiny has focused on potential banking staff collusion regarding unauthorized leaks of customer account balances to fraudsters.
Proposed regulatory and enforcement accountability may expand beyond traditional banking…: Proposed regulatory and enforcement accountability may expand beyond traditional banking entities to incorporate telecom providers and messaging services.
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SC told the RBI that its proposed SOP must mandate banks to indemnify victims who lose money to digital arrest frauds, citing possible bank staff complicity.
NEW DELHI: Convinced of bank personnel's complicity in cases of cyber fraudsters duping people by staging 'digital arrest', SC told Reserve Bank of India that its proposed Nov 30 standard operating procedure (SOP) must mandate every financial institution to indemnify those who lose money kept with banks to digital conmen."How do fraudsters and cybercriminals know how much money is kept in which account? Without bank employees sharing this information with fraudsters, there is no possibility of them targeting individual account holders," said a bench of CJI Surya Kant and Justices Joymalya Bagchi and V Mohana. It said the SOP, proposed to be released by Nov 30, must mandate banks to immediately intimate an account holder when they come across a high-value transaction on the account, distinct from past transactions and inform police.
It asked RBI to submit a list of banks and financial institutions to SC.Amicus curiae V S Nappinai told SC that the…
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