Here’s a scam every family should know by name: “digital arrest”. A caller claims to be police, or a judge, or from a government agency. They say you’re under arrest — digitally. They show fake court orders on video. Then they scare you into moving your money to “safe” accounts. Those accounts belong to the scammers.
On Thursday, 29 October, the Supreme Court took a firm step for victims of this scam. A bench led by Chief Justice Surya Kant, with Justices Joymalya Bagchi and V Mohana, said the RBI’s new anti-fraud rules must make banks repay victims in full — when an investigation finds the bank failed its own due-diligence checks.
The court’s words were plain: the rules “must mandate financial institutions to indemnify victims of digital arrest or cyber fraud through suitable compensation, not less than the amount lost by the customer, where the fraud or crime is found to have resulted from a failure of due diligence by the financial institution.”
How the case reached the court
The court is hearing the case on its own — a suo motu case titled “In Re: Victims of Digital Arrest Related to Forged Documents”. It started after a senior-citizen couple complained of losing Rs 1.05 crore to people who used forged judicial orders to frighten them.
The numbers behind the case are stark. Cybercrime cases have fallen by 50 per cent, the court noted. Yet victims still lost nearly Rs 800 crore this year. Fewer cases, bigger losses — the scams that succeed are draining large sums, often life savings.
The Chief Justice put the point bluntly during the hearing: “The amount will remain intact. The bank will have to pay. That is the only way.” He added that liability can’t stop with one officer — the institution itself must answer.
What banks will have to do
The court will first examine the RBI’s proposed Know Your Customer (KYC) Amendment Directions, 2026, before the rules can be notified. Those rules are due by 30 November and are to be in force by 31 December.
But the court wants more than general advice. It wants hard duties in the rules: compensation, prevention, and punishment for banks that don’t comply. One duty it repeated: banks must watch for odd transactions. If a transfer breaks a customer’s normal pattern, the bank should pause it and check — not just let it through.
The court also wants automated flagging of suspicious activity and physical verification to check whether a transaction is real. And it told the RBI to hand over a list of all authorised financial institutions by the next hearing, so its directions can cover every institution — not just the few named in court.
The Chief Justice also pushed banks to use AI and transaction history to spot and briefly freeze suspicious transfers, especially for individual account holders. And he warned: if the rules lack a liability clause, the court will “enforce it through a judicial order”.
What victims should do right now
Here’s the honest part, and it matters. This is not yet a final order that hands every victim their money back. It’s a direction about what the RBI’s rules must contain, and the court will check those rules before they go live. The next hearing is 30 November.
So if you or someone you know is hit by a digital-arrest scam, don’t wait for the rules. Act at once. Call your bank and ask them to freeze the transaction and the account. Report the fraud on the national cybercrime portal and at your local police station. Save every message, call record, screenshot and fake order — these are your proof.
And remember the one rule that defeats this scam every time: no real police officer, judge or agency will ever arrest you over a video call, or ask you to move money to a “safe account”. Anyone who does is a scammer, whatever uniform or seal they show on screen.
What’s still undecided
Three things are still open. First, the exact test for “failure of due diligence” — how a probe decides the bank, not the customer, is at fault. Second, how fast banks must pay once that finding is made. Third, whether the final rules cover every kind of financial institution or only banks.
The court has also asked law-enforcement agencies in all states and Union Territories to file reports on digital-arrest cases, with ideas for prevention and prosecution. Those reports will shape the next hearing.
For now, the signal is clear: banks can no longer treat digital-arrest losses as the customer’s problem alone. If their checks failed, they pay — at least the full amount lost.
Updated: 30 October 2026, 10:00 AM IST
Quick Read: On 29 October, the Supreme Court said RBI rules must force banks to repay victims — at least the full amount lost — where the bank failed due diligence. The case began with a senior-citizen couple who lost Rs 1.05 crore to scammers using fake court orders. The new RBI rules are due by 30 November, in force by 31 December; the court hears the case again on 30 November.
FAQ
Q: What is a digital arrest scam?
A: A caller pretends to be police or a judge, claims you’re under “digital arrest”, shows fake orders on video, and scares you into transferring money to accounts controlled by scammers. Real agencies never arrest anyone over a video call.
Q: Will every victim get their money back now?
A: Not automatically. The court says RBI rules must force repayment where a probe finds the bank failed due diligence. The rules are due by 30 November and the court checks them first.
Q: I just got such a call. What do I do first?
A: Don’t transfer money. Hang up, call your bank at once to freeze transactions, report on the national cybercrime portal and to local police, and save all messages and screenshots as proof.
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