Banks must alert customers to suspicious transactions: Supreme Court
What's the story
The Supreme Court has emphasized the responsibility of banks to alert customers of suspicious transactions and discussed the need for mechanisms to do so. The court was hearing a suo motu case on "digital arrest" scams. Chief Justice Surya Kant said banks should flag large, unusual transactions, like a retiree suddenly withdrawing ₹50 lakh, Live Law reported.
Cybersecurity measures
RBI drafts SOP for banks to tackle suspicious transactions
Attorney General R Venkataramani informed the court that the Reserve Bank of India (RBI) has drafted a Standard Operating Procedure (SOP) for banks to tackle such cases. The SOP includes measures like temporary debit holds to prevent cyber fraud. The court directed the Ministry of Home Affairs to adopt this SOP and ensure its nationwide implementation.
Fraud prevention
AI tools to alert customers about suspicious transactions
Senior Advocate NS Nappinai suggested banks use AI tools to alert customers about suspicious transactions. She stressed that merely issuing a circular won't be enough without compliance measures. The bench also emphasized banks' proactive role in preventing cyber frauds, with CJI Kant questioning why AI tools didn't flag suspicious transactions.
Fraud impact
Cyber fraud losses and banks' role
Justice Joymalya Bagchi highlighted that banks are becoming platforms for transmitting stolen money. "The problem is, banks are more into business mode...they are becoming, either innocently or connivingly, platforms through which there is a swift and seamless transmission of stolen proceeds of crime," he said. The Ministry of Home Affairs reported that over ₹52,000 crore was lost to cyber fraud between April 2021 and November 2025. CJI Kant compared this amount to the budget of several states, underscoring its enormity.
Committee formation
MHA forms committee to address 'digital arrests' issue
In light of the Supreme Court's order, the Ministry of Home Affairs has formed a High-level Inter-Departmental Committee to look into all aspects of "digital arrests." The committee will be chaired by Special Secretary (Internal Security) and include members from various ministries and agencies, including MeitY, DoT, MEA, CBI, among others.