The Supreme Court has directed the Centre, RBI, and states to create standard protocols to tackle 'digital arrest' scams. The move aims to speed up victim grievance redressal and fund restoration, following data showing over 16,000 complaints in the first half of 2026. This directive focuses on improving cyber fraud response mechanisms and managing mule accounts.
The Supreme Court has issued a fresh directive to the central government, state authorities, and the Reserve Bank of India (RBI) to establish unified Standard Operating Procedures (SOPs) to fight the growing threat of 'digital arrest' scams. This judicial intervention seeks to create a more efficient system for reporting cyber fraud, ensuring victims can file zero First Information Reports (FIRs) quickly, and streamlining the process for returning stolen funds.
Progress in Cyber Fraud Mitigation
Recent data from the Indian Cyber Crime Coordination Centre (I4C) highlights a notable trend in cyber-enabled fraud. While the number of complaints specifically related to digital arrests decreased from 123,672 in 2024 to 58,249 in 2025, and further to 16,377 in the first half of 2026, the court emphasized that these numbers remain a significant concern. To strengthen the response framework, a data-sharing partnership between the Reserve Bank Innovation Hub and I4C was finalized on May 11, 2026. Currently, the grievance redressal portal connects 123,590 bank branches across 69 banks, while a specific Money Restoration Mechanism covers 57 banks nationwide. Reports indicate that approximately ₹18.05 crore has been successfully returned to victims in 36,290 cases.
Regulatory Focus on Mule Accounts
Beyond immediate grievance redressal, the Supreme Court has ordered the RBI to develop a specialized SOP to identify and block 'mule' accounts—bank accounts often misused by fraudsters to layer and launder stolen money. This follows ongoing investigations by the Central Bureau of Investigation (CBI), which recently probed a digital arrest racket that impacted 238 victims and involved the movement of nearly ₹80 crore through 67 first-layer bank accounts.
Implementation Deadlines for States
Implementation remains uneven across the country. Currently, the e-Zero FIR mechanism is active in only 19 states, and just 14 states have formally notified their State Cyber Crime Coordination Centres. The Supreme Court has now set a four-week deadline for states and Union Territories to complete these notifications and align their local modules with the Ministry of Home Affairs' guidelines. Additionally, the government is moving forward with the Telecommunications (User Identification) Rules, 2025, to further tighten security.
For investors and the broader banking sector, the key development to track will be the effectiveness of these new SOPs in reducing the operational risk associated with cyber-enabled fraud. Future status reports are expected to provide detailed data on bank-wise and state-wise performance, which will offer insight into how effectively financial institutions are monitoring suspicious account activity and preventing financial losses.