In a strong indictment of banking security failures, the Supreme Court of India has ruled that negligence by banks, which leads to the siphoning of money from customer accounts through cyber fraud, constitutes a deficiency of service. The apex court emphasized the urgent need for the government and regulators to create a robust mechanism that triggers a nationwide alarm the moment scammers attempt to deceive account holders.
A Staggering Rs 3,000 Crore Cyber Heist
A bench comprising Chief Justice of India Surya Kant and Justice Joymalya Bagchi expressed shock at the scale of cybercrime, referring to an earlier disclosure by probe agencies that people have been conned to the tune of Rs 3,000 crore through methods like digital arrests and cyber heists. "The staggering amount taken from people through digital arrest and cyber fraud is shocking," the bench observed.
The court mandated that the banking system must immediately detect vulnerabilities when fraudsters try to exploit them. "The banking system must have a mechanism to detect these laxities immediately when scamsters attempt to exploit it and raise a countrywide alarm," the judges stated.
Government Acknowledges Gaps, SIM Box Sales Under Fire
Attorney General R Venkataramani, appearing for the government, admitted that obvious gaps exist, enabling such scams. He informed the court that various proposals are under the consideration of an inter-departmental ministerial committee aimed at creating a strong mechanism to prevent cybercrimes like digital arrest.
Highlighting a critical loophole, Vipin Nair, President of the SC Advocates-on-Record Association, brought to light the continued over-the-counter sale of SIM boxes, each containing up to 400 SIM cards. This allows scammers to use different numbers from a single device to con people. Nair pleaded for this practice to be stopped immediately.
The bench, which had earlier on December 1 flagged rampant breaches in SIM card issuance norms, directed the Department of Telecommunications (DoT) to submit a proposal to prevent SIM card misuse. It also asked authorities to immediately address the issue and take all measures to halt the over-the-counter sale of SIM boxes.
Focus on Recovery and International Comparison
Amicus Curiae and senior advocate N S Nappinai provided a comparative perspective, noting that while similar cyber crimes are prevalent in the United Kingdom, more than 90% of the stolen money is recovered and restored to the victims. She urged the Indian government and probe agencies to focus similarly on the recovery of siphoned amounts and their restoration to cheated account holders.
On the investigative front, Attorney General Venkataramani stated that the Central Bureau of Investigation (CBI), which is probing digital arrest cases nationwide, has made good progress. The Supreme Court bench has asked for the probe status report to be submitted in a sealed cover and offered to provide additional directions if needed for a seamless investigation.
