The Reserve Bank of India has submitted a draft standard operating procedure (SOP) to the Supreme Court and will refine it over the four-week period granted by the apex court before issuing it to regulated entities. According to Deputy Governor Swaminathan J at the post-monetary policy press conference on Wednesday, the RBI will fine-tune the SOP in light of the Supreme Court's observations and issue it soon. The SOP is expected to lay down procedures for placing a temporary hold on debits from suspected accounts, establishing a grievance redressal mechanism, restoring funds to victims wherever feasible, and creating public awareness about these safeguards. The RBI has already undertaken several initiatives to prevent cyber frauds, while regulated entities have stepped up customer awareness campaigns.
The Supreme Court on Tuesday issued comprehensive directions to tackle digital fraud, directing the Reserve Bank of India to prepare and circulate a standard operating procedure (SOP) for dealing with bank accounts linked to cyber frauds, including mule accounts within four weeks. According to reports from Business Standard, a bench comprising Chief Justice Surya Kant and Justices Joymalya Bagchi and V Mohana issued these directives while hearing a suo motu matter 'In Re: Victims of Digital Arrest Related to Forged Documents'. The court directed all states, Union Territories and law enforcement agencies to ensure expeditious adoption and operationalisation of grievance redressal and money restoration modules for victims of such frauds. The bench emphasised that while the progress reported at this stage is appreciable, the mechanisms already put in place require wider adoption, faster implementation and continued follow-up.
The bench directed authorities to ensure prompt disposal of cases relating to the freezing of bank accounts in cyber fraud investigations. According to PTI and LiveLaw, the Supreme Court directed the RBI to adopt and circulate a Standard Operating Procedure (SOP) for banks within four weeks, as reported by PTI and LiveLaw. The SOP must incorporate a grievance redressal mechanism, a money restoration module and measures to spread public awareness about both mechanisms. The court also asked the Inter-Departmental Committee constituted by the Centre to consult banks and financial intermediaries on measures to prevent 'digital arrest' scams and facilitate the recovery of money defrauded from victims. The court directed the Inter-Departmental Committee to examine and discuss the proposal for a shared liability and victim compensation framework and consult with banks and intermediaries regarding technological measures that may be adopted to prevent digital arrest scams.
The RBI has introduced a compensation framework for victims of small-value digital banking frauds, with victims including individuals and sole proprietors who suffer losses of up to ₹50,000 in fraudulent electronic banking transactions eligible for compensation of up to ₹25,000. According to Deputy Governor Swaminathan J, the compensation will be equivalent to 85 per cent of the net loss or ₹25,000, whichever is lower, and can be availed of only once in a lifetime. The deputy governor emphasised that wherever people have unfortunately fallen victim to fraud, law-enforcement agencies and regulated entities will make the best possible effort to restore their money to the extent feasible.
To curb the misuse of mule accounts for layering and diversion of funds in cyber frauds, the RBI has rolled out MuleHunter.AI, an artificial intelligence- and machine learning-based solution for detecting mule accounts. The platform is currently operational across 26 banks and is being scaled up further. The central bank has also issued advisories requiring banks to strengthen systems and controls to prevent and detect cyber-enabled frauds and the misuse of banking channels through suspected mule accounts. The bench directed the Inter-Departmental Committee to issue necessary directions, advisories and instructions to all states, UTs, Ministries and government departments to undertake and promote awareness programmes relating to cybercrimes, including digital arrest scams.
The Supreme Court has mandated that only 18 states have established State Cyber Crime Coordination Centres so far, directing the remaining states to notify and operationalise such centres within four weeks. As reported by Business Standard, the court also asked them to take steps to adopt the e-Zero FIR mechanism, in consultation with I4C (Indian Cyber Crime co-ordination Centre). The bench directed the State Legal Services Authorities to undertake public awareness initiatives on prevention of digital arrest scams, awareness, cyber security and assistance available for recovery of defrauded amounts. The court emphasised that an aggrieved person may ordinarily be encouraged to avail of the grievance redressal mechanism, but doing so shall not operate as a bar to the exercise of any constitutional, statutory or other legal remedies available in law. The I4C shall ensure necessary follow-up and provide the requisite assistance to the States for implementation of these directions.
Taking note of the status report filed by the Indian Cyber Crime Coordination Centre (I4C), the Court recorded that restoration of defrauded money had been completed in 36,290 cases involving ₹18.05 crore, with the participation of 57 banks and all States and Union Territories. As reported by PTI and LiveLaw, the bench also noted the progress made by the Central Bureau of Investigation (CBI), observing that it had registered digital arrest and connected cases, identified victims through transactions in 67 first-layer bank accounts and conducted searches at 93 locations across 16 States. The Court further recorded that the Inter-Departmental Committee had requested the CBI to examine the feasibility of lowering the existing monetary threshold for taking over cyber fraud investigations and whether cases involving the same organised network could be aggregated to meet the prescribed threshold. The Supreme Court further directed the Ministry of Electronics and Information Technology (MeitY), the Department of Telecommunications (DoT) and the Indian Cyber Crime Coordination Centre (I4C) to examine the proposal for introducing time-based restrictions on telecom services for audio and video calls, asking them to place a brief note before the Court on the proposal's feasibility, utility and possible alternatives. The Court listed the matter for further hearing on September 16, 2026.
