Banks to compensate digital arrest victims? SC mulls big move amid push for new RBI cyber crime rules
CJI Surya Kant noted that about ₹800 crore was lost to digital arrest scams this year, which led to questions about the RBI's efforts to tackle such crimes
The Supreme Court is mulling holding banks and financial institutions liable to compensate victims of digital arrest scams and face prosecution for a lack of due diligence, emphasizing immediate transaction withholding and proactive cyber crime prevention.
The Supreme Court is mulling holding banks and financial institutions liable to compensate victims of digital arrest scams and face prosecution for a lack of due diligence, emphasizing immediate transaction withholding and proactive cyber crime prevention.
The Supreme Court is mulling holding banks and financial institutions liable to compensate victims of digital arrest scams and face prosecution for a lack of due diligence, emphasizing immediate transaction withholding and proactive cyber crime prevention.
The Supreme Court on Thursday said that it was mulling making banks and other financial institutions compensate the victims of digital arrest scams and face prosecution in cases where a failure of due diligence was proven.
“We are proposing to direct that wherever such fraud takes place, bank will compensate victim and suffer prosecution. It has to be done,” CJI Surya Kant said, questioning why banks' protective safeguards do not help stop such crimes, a LiveLaw report said.
The CJI also pointed out that financial institutions were already capable of negotiating one-time settlement arrangements worth crores of rupees when it came to loan recovery.
He also noted that unusual transactions should be stopped until they were verified.
The proposed idea comes as part of a Supreme Court suo motu case hearing on the issue of digital arrests, in which a bench of CJI Surya Kant, Justice Joymalya Bagchi, and Justice V. Mohana were informed that such scams persist even now.
To back up this point, the amicus curiae—Senior Advocate N.S. Nappinai—cited a recent digital arrest case that led to a woman losing ₹2.5 crore, which is part of the roughly ₹800 crore lost to such scams this year.
“What kind of person you are in a democratic country if you think you are getting arrested on mobile? Hit the mobile on the wall and the arrest goes," the CJI declared, questioning why people were falling for such scams in this day and age, despite awareness campaigns and stringent safeguards being employed.
However, Attorney General (AG) R. Venkataramani opposed the Supreme Court enforcing such a punishment on banks and other financial institutions, and stated that this was a matter for the Reserve Bank of India (RBI) to tackle.
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He reiterated that the RBI's proposed regulatory measures to crack down on digital arrests would soon go operational, and that they were part of a series of its reforms on cyber threat prevention.
The AG noted that banks are now better at flagging suspicious transactions compared to six months ago, and that he had pushed for the new rules with the RBI, for which the Indian Cyber Crime Coordination Centre (I4C) is also working round the clock.
“Report will only be post-mortem. What about prevention? Moment a transaction comes, why can't it be withheld?” the CJI questioned, putting the focus on prevention, rather than action after the crime has taken place.