₹54,000 cr Digital Fraud Is ‘Robbery’, Says SC

Key observations:

* Loss exceeds budgets of several small states.

* Fraud may involve bank official collusion or negligence.

* Urgent action needed from RBI and banks.

Court directions:

* Centre to draft a Standard Operating Procedure (SoP).

* CBI directed to identify digital arrest cases.

* RBI, DoT to frame compensation mechanism for victims.

New Delhi: The Supreme Court on Monday described the siphoning of more than Rs 54,000 crore through digital frauds as “robbery or dacoity” and directed the Centre to frame a standard operating procedure (SoP) in consultation with stakeholders to tackle such offences.

Observing that the amount lost to digital frauds exceeded the budgets of several small States, a three-judge Bench headed by Chief Justice Surya Kant, and comprising Justices Joymalya Bagchi and N V Anjaria, stressed the need for timely action by the RBI and banks.

The Bench said such large-scale frauds could be the result of either collusion or negligence on the part of bank officials.

Issuing a series of directions, the court asked the Union home ministry to examine the existing SoPs of the RBI and similar guidelines or decisions of the Department of Telecommunications, and prepare a draft memorandum of understanding within four weeks to effectively address digital fraud cases.

Noting that the RBI had already framed an SoP empowering banks to temporarily block debit cards to prevent cyber-enabled fraud, the court directed the CBI to identify cases involving so-called digital arrests. It also asked the Gujarat and Delhi governments to grant sanction to the CBI to proceed with investigations in the identified cases.

The court further directed the RBI, the DoT and other authorities to hold a joint meeting to evolve a framework for awarding compensation to victims of digital arrest frauds. It said a pragmatic and liberal approach was required in deciding compensation.

The matter was posted for further hearing after four weeks, with directions to the authorities to file fresh status reports.

Earlier, on December 16, the court had asked the Centre to consider suggestions made by an amicus curiae on compensating victims, while expressing concern over the massive sums being siphoned out of the country by cyber criminals. On December 1, it had ordered the CBI to conduct a pan-India investigation into digital arrest cases and questioned the RBI on why artificial intelligence was not being used to trace and freeze accounts used for such crimes.

Digital arrest frauds involve cyber criminals impersonating law enforcement officials or government authorities to intimidate victims through audio or video calls, effectively holding them hostage and extracting money through online transactions.