Supreme Court issues directions to curb digital arrest scams, asks RBI to frame SOP on mule accounts

The Supreme Court on Tuesday issued a series of nationwide directions to strengthen the fight against digital arrest scams in India.

A Bench led by Chief Justice of India (CJI) Surya Kant and Justices Joymalya Bagchi and V Mohana passed the order in a suo motu case initiated last year on the issue.

Among other directives, the Court ordered the Reserve Bank of India (RBI) to prepare a standard operating procedure (SOP) within four weeks for dealing with mule accounts (bank accounts used by criminals to receive, transfer or launder illicit money, many a time without the knowledge of the account holder).

The Court passed the directions after considering a status report filed by the Indian Cyber Crime Coordination Centre (I4C) of the Union Ministry of Home Affairs.

The report detailed steps taken by various ministries, regulators, investigating agencies, banks and intermediaries pursuant to the Court's earlier interim orders dated December 10, 2025 and February 9, 2026.

The Court noted that the latest status report reflected encouraging progress in tackling digital arrest scams. According to the report, complaints received on the National Cyber Crime Reporting Portal (NCRP) relating to digital arrest scams declined from 1,23,672 in 2024 to 58,249 in 2025, and further to 16,377 up to June 30, 2026.

The corresponding amount lost to such frauds had also reduced substantially. However, the Bench observed that continued monitoring of the issue remains necessary.

The Court also noted that the Central Bureau of Investigation (CBI) registered ten digital arrest cases and several connected matters. In one investigation alone, the CBI identified 238 victims, tracked 67 first-layer bank accounts, uncovered transactions worth about ₹80 crore and conducted searches at 93 locations across 16 States.

The Court further noted the Inter-Departmental Committee's suggestion that the CBI should consider lowering the existing ₹10-crore threshold for taking over digital arrest cases and consider aggregating cases involving the same organised network to meet the threshold.

The Court said that the progress made was appreciable, but proceeded to issue the following directions for the wider adoption and faster implementation of the steps take to tackle digital scams.

Directions issued

1. RBI was directed to prepare and circulate, within four weeks, an SOP for dealing with mule accounts and accounts linked to money laundering and cyber-enabled fraud. The SOP is also to be furnished to the Registrar General of every High Court.

2. The Court directed all States, Union Territories and law enforcement agencies to expeditiously operationalise (i) the Grievance Redressal Module and (ii) the Money Restoration Module. These mechanisms were introduced under the MHA's January 2 SOP governing the National Cyber Crime Reporting Portal and Cyber RMS. The States were also directed to create public awareness about digital arrest scams and the mechanisms in place to report and tackle them.

3. Registrar Generals of all High Courts were directed to inform courts and adjudicating authorities dealing with bank account freezing in cyber fraud cases about these grievance mechanisms. This is so that affected persons may be encouraged to use them before pursuing other legal remedies, without affecting their statutory or constitutional rights.

4. The Bench further directed States that are yet to notify State Cyber Crime Coordination Centres to do so within four weeks and to adopt the e-Zero FIR mechanism in consultation with Indian Cyber Crime Coordination Centre.

5. The Court also instructed authorities to ensure the expeditious disposal of bank account freezing cases arising out of cyber-enabled financial fraud.

6. The Inter-Departmental Committee shall consult with banks and intermediaries regarding technological measures that may be adopted to (i) prevent digital arrest scams; (ii) assist in the recovery of defrauded amounts; (iii) facilitate investigation of digital arrest cases; and (iv) ensure cooperation and compliance with all applicable statutory obligations and legal requirements.

7. The Court recommended that all State Legal Services Authorities must immediately undertake public awareness initiatives on the prevention of digital arrest scams, cybercrime awareness, cybersecurity, and the assistance available for recovery of defrauded amounts.

8. The Court asked the Inter-Departmental Committee to examine a proposal for a shared liability and victim compensation framework.

9. The Court also asked the Committee to continue examining whether the threshold of monetary loss for CBI investigation of digital arrest scams should be lowered and whether organised frauds can be aggregated for the purpose of meeting the threshold.

10. The Ministry of Electronics and Information Technology (MeitY), the Department of Telecommunications (DoT) and Indian Cyber Crime Coordination Centre, in consultation with the concerned intermediaries, shall examine a proposal relating to time-based restrictions on telecom services for audio and video calls.

In its order today, the Court also recorded that a data-sharing memorandum of understanding (MoU) between the RBI Innovation Hub and Indian Cyber Crime Coordination Centre had been executed on May 11, 2026.

It noted that a cybercrime grievance redressal mechanism portal now covers 1,23,590 branches of 69 banks, while the Money Restoration Mechanism Portal has 57 participating banks across all 36 States and Union Territories. According to the status report, money has been restored in 36,290 cases involving an aggregate amount of ₹18.05 crore.

It further recorded that the Telecommunications (Radio Equipment Possession Authorisation) Rules, 2025, have been notified, and the Telecommunications (User Identification) Rules, 2025 are at the final stage of notification.

These rules are meant to to curb the misuse of telecom infrastructure, including illegal radio equipment, SIM cards and identity fraud that facilitate cyber-enabled offences.

The matter has been directed to be listed next on September 16 when a fresh consolidated status report is to be filed.

The next report is also to include State-wise and bank-wise data indicating the grievances registered on the grievance reporting mechanisms and the number of such complaints that are disposed of, the number of summary money restoration orders issued and completed and the amount of money so restored.

[Live Coverage]