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Cybercrimes have become so rampant that innocent victims have been losing hundreds of crores every year in India. The Supreme Court has finally intervened to protect the citizens against this menace.
In what could be a landmark judgement, the apex court held that banks must compensate victims for full financial losses if they fail to maintain proper protection while opening accounts.
The top court warned if financial institutions do not voluntarily implement measures to protect customers, it will enforce them through strict judicial orders. The bench expressed strong concern over the sharp rise in digital arrest scams across India, where innocent citizens are fooled into transferring life savings.
The Judges pointed out that fraudsters heavily rely on fake accounts created without proper KYC verification to defraud money. The court observed that failure in bank verification directly helps cyber criminals in moving illicit cash smoothly across multiple accounts.
The Supreme Court stressed that liability should be fixed on bank staff whoever is colluding with fraudsters to open dummy accounts. The bench directed the Reserve Bank of India to carefully examine current KYC compliance rules and fix accountability for security lapses.
The court noted that banking systems cannot simply shift the blame on innocent public for falling prey to cyberattacks and digital arrests. Under the proposed framework, if a fake account is used to withdraw or transfer scammed money, the issuing bank will be held responsible for the lapse
Consumer protection activists have welcomed the top court’s observation, calling it a historic decision to protect common people from digital threats.
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