SC Calls for Compensation to Digital Fraud Victims

New Delhi,October 29
The Supreme Court has said banks and other financial institutions must be held accountable for losses suffered by victims of digital fraud.

The court observed that victims of offences such as digital arrest scams should receive compensation of at least the amount lost if the fraud is found to have resulted from a financial institution’s failure to exercise due diligence.

A bench comprising Chief Justice Surya Kant and Justices Joymalya Bagchi and V. Mohana said, it will examine the Reserve Bank of India’s proposed Know Your Customer (KYC) Amendment Directions, 2026.

The directions are expected to be notified by 30th of November and made operational by 31st of December. The bench stressed that the proposed regulatory framework must provide for appropriate compensation when financial institutions are found to have failed in their due diligence obligations.

The apex court directed the RBI to submit a list of all authorised financial institutions by the next date of hearing. It said the court could issue directions applicable to all such institutions without necessarily impleading individual banks in the proceedings.