Supreme Court Takes Firm Stance on Digital Arrests, Mandates Full Compensation for Victims of Bank Negligence
The Supreme Court has emphasized that banks must fully compensate victims of digital arrests due to negligence, reviewing proposed anti-cyber fraud regulations.
New Delhi, October 29 (Daily Kiran) : The Supreme Court of India has adopted a stringent approach regarding the rising incidents of digital arrests and cyber fraud across the country. The court announced that it would review the anti-cyber fraud regulations proposed by the Reserve Bank of India (RBI) before permitting their notification.
In its directives, the Supreme Court made it clear that the regulations must include a provision ensuring that if a financial institution’s negligence leads to fraud, the institution is obligated to fully compensate the victim for their losses. The court noted that in many cases, the inaction of banks and the role of their employees have allowed fraudsters to easily withdraw money from people’s accounts.
During the hearing, the court emphasized the necessity of establishing accountability for banks in digital arrest cases. It called for a system where the bank directly compensates the victim for the amount withdrawn from their account, preventing citizens from facing undue hardship. The court insisted that the proposed RBI regulations should mandate that if a financial institution fails to conduct necessary investigations and adhere to Know Your Customer (KYC) protocols, resulting in a digital arrest or cyber fraud, the institution must compensate the victim for the full amount lost.
In light of the court’s firm stance, the Attorney General representing the central government assured that any employee found negligent in cases of digital arrests would be held personally accountable and face action. He stated that the government and the RBI are working together to establish a robust framework.
The Supreme Court also highlighted another critical aspect, noting that nearly all incidents of digital arrests involve misuse of WhatsApp. Fraudsters often impersonate police officers, CBI agents, or ED officials through WhatsApp calls and video calls, instilling fear in victims and falsely claiming to arrest them digitally.
