‘Absolute Robbery’: India SC Condemns Banks Over Rs520-Billion Digital Fraud

The Indian Supreme Court has slammed banks for serious lapses and possible collusion by officials in a massive digital fraud that stole over Rs520 billion (Dh21 billion) from the public between April 2021 and November 2025. Describing the scam as “absolute robbery or dacoity,” the court highlighted the urgent need for stronger safeguards to protect citizens, particularly senior citizens, from cyber-enabled crimes.

The fraud involved criminals posing as police and security officials, claiming victims were under ‘digital arrest’ in connection with high-profile drug smuggling cases. Many unsuspecting individuals, especially the elderly, were tricked into handing over bank details or transferring large sums of money, believing they were complying with law enforcement directives.

Chief Justice Surya Kant, hearing the case suo motu, noted that several bank officials were “completely hand in glove with the accused.” He emphasised that banks, as trustees of public money, have a duty to protect depositors and not become complicit in fraud. “These banks are becoming a liability. Banks should know that they are trustees of the money, and they should not get overexcited with it. That trust should not be broken,” he said, highlighting how bank loans to fraudsters often lead to legal entanglements before the NCLT and NCLAT when fraudulent companies face insolvency proceedings.

The case gained prominence after a senior-citizen couple approached the Supreme Court last October, reporting that they had been defrauded of Rs15 million (Dh607,000) by fraudsters impersonating officials from investigative agencies and the judiciary.

In response, the court directed the Central Bureau of Investigation (CBI) to launch a thorough investigation into such scams. It also instructed the Ministry of Home Affairs to implement a recently issued Reserve Bank of India (RBI) standard operating procedure (SOP) within two weeks. The SOP, issued on January 2, 2026, prescribes preventive measures that banks can take, including placing temporary holds on debit transactions to curb cyber-enabled fraud. The court emphasised that the SOP should be adopted nationwide to improve inter-agency coordination and ensure rapid location and assistance for defrauded parties.

The Supreme Court’s strong intervention underscores the growing menace of digital fraud in India and highlights systemic gaps in banking procedures that criminals exploit. Thousands of citizens, particularly vulnerable senior citizens, continue to fall prey to such scams, often losing life savings in sophisticated schemes orchestrated by gangs impersonating law enforcement.

As the government and financial institutions move to implement the court’s directives, the ruling serves as a stern reminder that banks must safeguard public trust and tighten their internal controls to prevent becoming unwitting partners in digital crimes.

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