Rs 54,000 cr lost in digital arrests, this is dacoity: SC, Pg14

Key Highlights:

• The Supreme Court (SC) addressed the issue of digital arrests, noting over Rs 54,000 crore lost.
• The SC questioned the RBI and banks' role in preventing digital fraud and urged the use of AI tools to detect suspicious transactions.
• The court criticized banks for reckless lending and becoming a liability, suggesting they are becoming platforms for stolen proceeds.
• The Attorney General informed the court that the RBI has created a Standard Operating Procedure (SOP) for banks regarding digital arrests.
• The SC directed the Ministry of Home Affairs (MHA) to implement the SOP dated January 2, 2026, for inter-agency coordination.

Detailed Insights:

• The Supreme Court has directed the RBI, MHA, and other authorities to consider suspending suspicious transactions under the Prevention of Money Laundering Act (PMLA).
• The court has asked authorities to hold a meeting to develop a framework for victim compensation in digital arrest cases.
• The Amicus Curiae pointed out that the RBI imposes nominal penalties on banks violating circulars, which are not proportionate to the losses incurred.
• The RBI's Mule Hunter, an AI tool, has been implemented by 86 banks, but banks need to develop more advanced AI tools for velocity checks to detect unusual transactions.
• The court emphasized that banks should use AI to detect unusual transactions in accounts with nominal activity and introduce a robust mechanism to prevent fraud.

Key Concepts Involved:

• Digital Arrests: A form of cybercrime where individuals are coerced into transferring funds under false pretenses, often involving threats or intimidation.
• Artificial Intelligence (AI): The simulation of human intelligence processes by computer systems, enabling tasks like fraud detection and transaction monitoring.
• Standard Operating Procedure (SOP): A set of step-by-step instructions compiled by an organization to help workers carry out complex routine operations.