Supreme Court says banks may have to compensate victims if negligence enables cyber fraud

India’s Supreme Court is considering bank compensation for people who lose money to cyber fraud when a bank’s negligence helped the scam happen.

The case concerns digital-arrest scams, in which fraudsters pressure people into believing they are being arrested over a phone or video call.

The three-judge bench said banks should watch for unusual transactions and consider checking them before money is sent.

It said victims should be repaid at least for their losses if an investigation finds a bank failed to take necessary care.

The court noted that such crimes caused about 800 crore rupees in losses this year, despite a reported fall in registered digital-arrest cases.

It asked India’s central bank, the RBI, to provide a list of authorised financial institutions and examine whether proposed KYC rules provide for compensation.

The court may issue directions applying to all financial institutions, and will consider the RBI’s proposed rules at a later hearing.