Rs 54,000 cr lost in digital arrests, this is dacoity: Supreme Court

CJI Kant also criticised the indiscriminate lending by banks saying “what is happening is that these banks are in due course of time becoming a huge liability on the public… The courts have become their recovery agents. They grant reckless loan amounts and then you have NCLT and various other quasi-judicial systems only to recover money for them… They should be put behind the bars if they are indulging in this …”

Attorney General R Venkataramani, meanwhile, informed the court that the RBI has come up with an SOP for banks to deal with digital arrest cases. Taking note, the court directed the Union Ministry of Home Affairs to formally adopt and implement the SOP dated January 2, 2026 across India for inter-agency coordination, location of defrauded parties etc. It also directed that the Rules in this regard be notified in three weeks.

The SC also asked the RBI, MHA and others “to consider the desirability of suspending the suspicious transactions…under PMLA”. It called upon the authorities to “jointly hold a meeting to evolve a framework for victim compensation in digital arrests cases”.

Posting the matter for hearing after two weeks, the court also sought a fresh status report.

Amicus Curiae Senior Advocate N S Nappinai told the bench, which also comprised Justices Joymalya Bagchi and N V Anjaria, that the “RBI is only imposing nominal penalties on banks which are violating its own circulars which are not commensurate with the loss on account of the violation”.

She said for eg., Mule Hunter developed by RBI as an AI tool has been implemented by 86 banks. “But RBI’s own circular mandates that banks have to develop AI tools which go beyond Mule Hunters, which will include velocity checks. When a digital arrest victim transfers sums that are unnaturally high, even that can be detected using AI tools and can be paused or it can be a trigger which will then ensure either pausing of the transactions at the issuer bank itself or at the receiving bank’s end. That has not been done.”

The CJI said, “There will be certain grey areas where probably with a view to whatever may be, we will not say it’s their compulsion, but they may not want to pressurise banks to adopt certain things. But it does not mean that we will also finally agree to that. We will then see what is to be done by us.”

Reiterating that banks should be able to detect with AI when unusual transactions take place in accounts which see nominal activity every month, the CJI said, “We hope that they will not invite a direction (from us)… If RBI can introduce some…robust mechanism.”

Justice Bagchi said, “The problem is banks are more into business model, and naturally so with its ideas of profit earned and in doing that, what they are becoming either innocently or may be connivingly, the platforms through which there is a very swift and seamless transmission of stolen proceeds of crime.”