The Supreme Court has been informed that an inter-departmental committee constituted by the Ministry of Home Affairs (MHA) is examining whether banks, telecom service providers and other intermediaries can be held liable for financial losses suffered by victims of so-called “digital arrest” scams, particularly where such losses arise from negligence, lapses or fraudulent conduct.
The committee was formed pursuant to the Supreme Court taking suo motu cognisance of the growing number of cyber fraud cases in which victims are coerced by impersonators posing as law enforcement officials or government authorities and are forced to transfer money under threats of arrest or legal action.
In a status report placed before the Court, the committee stated that accountability mechanisms must be strengthened where institutional failures contribute to victim losses. It noted that compensation may be warranted in cases where banks or telecom operators fail to comply with prescribed safeguards, delay action despite red flags, or facilitate fraud through deficient service delivery.
The panel, headed by a senior official of the MHA, includes representatives from the Reserve Bank of India (RBI), Department of Telecommunications (DoT), Ministry of Electronics and Information Technology (MeitY), Indian Cyber Crime Coordination Centre (I4C) and several other government agencies. Its mandate includes reviewing existing laws, enforcement challenges and remedial frameworks related to cybercrime.
The report also highlighted steps being taken by regulators, including RBI’s efforts to improve real-time fraud detection and standardise procedures for freezing suspicious bank accounts, as well as DoT’s initiatives to curb misuse of telecom resources through stricter SIM issuance norms.
On the issue of victim relief, the committee observed that existing compensation mechanisms require further refinement to ensure timely and effective redressal. It has sought additional time to submit comprehensive recommendations on institutional responsibility and compensation frameworks.
The Supreme Court has listed the matter for further hearing, where it will consider the committee’s findings and issue appropriate directions to address the rising menace of digital frauds.
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