Supreme Court wants RBI rules to make banks indemnify digital arrest and cyber fraud victims

29 October 2026

Hearing the suo motu case In Re: Victims of Digital Arrest Related to Forged Documents, SMW (Crl.) 3 of 2025, the Supreme Court recorded an order on 29 October 2026 saying the Reserve Bank of India's proposed regulations must mandate financial institutions to indemnify digital arrest or cyber fraud victims for at least the amount lost. The bench of Chief Justice of India Surya Kant, Justice Joymalya Bagchi and Justice V. Mohana took the view that a financial institution should face strict liability where it or its officials are found negligent in exercising due diligence. The Attorney General told the Court that the RBI's regulatory measures may be operational by December. The Court also noted work by the Ministry of Electronics and Information Technology and the Department of Telecommunications, and the question of the liability of banking officials. Digital arrest is a fraud in which callers posing as law enforcement keep a victim on a video call and extract money.