Alarmed by the scale of cyber-enabled financial crimes, the Supreme Court on Monday called for urgent regulatory intervention by the Reserve Bank of India (RBI) after revealing that nearly ₹52,969 crore was siphoned off through online frauds between April 2021 and November 2025.
Describing the surge in digital scams as nothing short of “absolute robbery or dacoity,” a Bench headed by Chief Justice of India Surya Kant and Justice Joymalya Bagchi said banks must introduce stronger checks to protect depositors’ money, which they hold in fiduciary trust.
The court observed that faster digital payment systems, while improving convenience, were also enabling the rapid movement of stolen funds. Justice Bagchi remarked that banks appeared to be operating largely in “business mode,” prioritising transaction speed over customer safety.
Raising concerns over the absence of effective red flags, Chief Justice Kant questioned why unusually large withdrawals were not automatically flagged by banks. He cited instances where sums as high as ₹50 lakh were withdrawn from accounts that typically saw monthly transactions of barely ₹10,000, particularly involving senior citizens and retirees.
“The definition of suspicious transactions needs to be expanded,” the Bench said, stressing that automated alerts and real-time monitoring should be mandatory for abnormal activity patterns.
The observations came during hearings on a batch of petitions related to rising cyber fraud cases, including so-called “digital arrest” scams, where fraudsters impersonate law enforcement officials to coerce victims into transferring money.
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In a significant directive, the Supreme Court ordered the Union Home Ministry to formally adopt and implement, across all States and Union Territories, a Standard Operating Procedure issued on January 2 for handling cyber-enabled frauds. The SOP focuses on inter-agency coordination, rapid response mechanisms and identification of victim locations. The court also asked the Centre to notify the necessary rules to operationalise the framework nationwide.
Attorney General R. Venkataramani, appearing for the Union government and RBI, informed the court that authorities were finalising a memorandum of understanding to enable sharing of suspect registries and mule account data among banks and enforcement agencies. These tools, he said, would help in both preventing fraud and blocking suspicious transactions in real time.
According to figures cited before the court, online fraud losses have risen sharply over the past four years, underscoring vulnerabilities in India’s rapidly expanding digital payments ecosystem. The judges underlined that regulatory oversight must keep pace with technological adoption, particularly as millions of first-time users enter digital banking platforms.
Legal experts say the ruling could push banks to recalibrate their risk management frameworks, introducing stricter Know Your Customer (KYC) norms, enhanced transaction monitoring and faster account-freezing protocols once fraud is reported.
The court’s intervention also comes amid growing public pressure on lenders to shoulder greater responsibility for cybercrime losses, especially in cases where warning signs are allegedly ignored.
Separately, the RBI is understood to be working on measures to provide limited compensation to victims of online fraud, alongside strengthening supervisory controls over payment intermediaries and banks.
The Supreme Court is expected to continue monitoring compliance with its directions in subsequent hearings, with a focus on accountability mechanisms and timelines for implementation.
For millions of digital banking users, the outcome could shape a more secure financial ecosystem — one where convenience is matched by robust safeguards against increasingly sophisticated cybercriminals.
About the author – Ayesha Aayat is a law student and contributor covering cybercrime, online frauds, and digital safety concerns. Her writing aims to raise awareness about evolving cyber threats and legal responses.
