Supreme Court Orders Nationwide Safeguards Against Digital Arrest Scams
RBI must standardize bank freezes and money restoration as judges examine victim compensation, institutional liability and possible limits on scam calls.
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The Supreme Court has ordered the Reserve Bank of India (RBI) to adopt and circulate uniform procedures for banks handling accounts linked to cyber-enabled financial fraud, including so-called digital arrest scams.
The RBI must issue the standard operating procedure within four weeks, a bench comprising Chief Justice of India Surya Kant and Justices Joymalya Bagchi and V. Mohana said on Tuesday, August 4.
Digital arrest scams typically involve criminals impersonating police officers, investigators, customs officials or judges over phone or video calls. Victims are falsely told they are under investigation or face arrest and are pressured into transferring money to accounts controlled by the fraudsters.
Such receiving accounts are often described as mule accounts because they are used to collect, transfer or conceal stolen money, sometimes with the account holder’s knowledge and sometimes without it.
The directions were issued in proceedings initiated by the court in October 2025 after a senior citizen couple said they had lost ₹1.5 crore to criminals who impersonated officials and displayed forged Supreme Court documents.
The case is titled In Re Victims of Digital Arrest Related to Forged Documents.
The court reviewed a status report from the Indian Cyber Crime Coordination Centre, or I4C, showing that reported digital arrest complaints fell from 123,672 in 2024 to 58,249 in 2025. A further 16,377 complaints were recorded in the six months to June 30 2026.
A grievance portal now covers 123,590 branches of 69 banks. A separate money-restoration system involving 57 banks has returned ₹18.05 crore in 36,290 cases across all states and Union Territories, according to the report.
The Central Bureau of Investigation has registered 10 digital arrest cases and several connected cases. In one investigation, it identified 238 victims, 67 first-layer bank accounts and transactions worth about ₹80 crore. The agency searched 93 locations across 16 states.
The bench said the mechanisms established so far had produced encouraging results but required wider adoption, faster decisions and continued supervision.
The RBI procedure must specify how banks should impose temporary debit restrictions on funds or accounts suspected of involvement in mule activity or cyber fraud. It must also include a grievance process for people affected by account freezes, a mechanism for restoring recovered money to victims and measures to publicize both systems.
A copy of the final procedure must be provided to I4C and the registrars general of all High Courts.
All states, Union Territories and law-enforcement agencies must operationalize the grievance-redressal and money-restoration modules established under a Ministry of Home Affairs procedure dated January 2, 2026. They must also inform the public about how the systems can be used.
Victims should be encouraged to use the grievance process before pursuing court proceedings, although doing so will not prevent them from seeking other legal remedies.
The next status report must provide state-wise and bank-wise data on grievances received and resolved, restoration orders issued and completed, and the amounts returned to victims.
The court directed states and Union Territories that have not yet notified their cybercrime coordination centres to do so within four weeks. They must implement the e-Zero FIR system in consultation with I4C and with assistance from the Ministry of Home Affairs.
The e-Zero FIR system allows complaints involving major cybercrime losses to be registered electronically and transferred to the appropriate police station, reducing delays caused by questions over jurisdiction.
The court asked an interdepartmental committee to consider whether banks, payment companies or other institutions should share responsibility for losses in certain cases. The panel will also study the creation of a compensation framework for victims.
It must examine whether the financial threshold for transferring cyber-fraud investigations to the CBI should be reduced. Cases connected to the same organized network could also be combined when assessing whether that threshold has been met.
Separately, the Ministry of Electronics and Information Technology, the Department of Telecommunications and I4C were asked to study whether time-based limits on audio and video calls could help disrupt digital arrest scams.
The agencies must submit a note examining the feasibility and likely effectiveness of such restrictions, as well as possible alternatives.
The court has not ordered restrictions on audio or video calls at this stage. The matter will be heard again on September 16.
