Cyber Fraud: Supreme Court Seeks Stronger RBI Rules, List Of Measures From WhatsApp And Intermediaries

The Supreme Court has directed communication platforms, such as WhatsApp and other intermediaries to present a list of measures they are following to prevent cyber fraud. In an order uploaded following an October 29 hearing in a suo motu case titled ‘In Re: Victims of Digital Arrest Related to Forged Documents’ by a bench headed by Chief Justice of India Surya Kant, alongside Justices Joymalya Bagchi and V Mohana, the bench directed such platforms and intermediaries to apprise the Court of their proposed anti-fraud measures and simultaneously submit their proposals to the Indian Cybercrime Coordination Centre (I4C).

Senior Advocate Kapil Sibal, who represented WhatsApp, informed the court that the platform has already taken preventive action against 9,400 accounts and is developing software to detect suspicious accounts and issue user warnings. 

Sibal assured the apex court that an affidavit would be filed in this regard. The Bench ordered all concerned intermediaries to submit their proposals before the next hearing on November 23, 2026.

The apex court also emphasised the role of banks in preventing digital scams and financial losses. According to a report by PTI, the court highlighted that cybercrimes have dropped by 50 per cent this year, but the victims have still lost Rs 800 crore. The Bench said that banks must serve as a ‘protective umbrella’ for vulnerable account holders and also mandated that regulatory frameworks must have enforceable compensation provisions.

The court instructed the Reserve Bank of India (RBI) that its proposed framework should ensure that financial institutions fully indemnify victims and pay compensation not less than the stolen amount when it is confirmed in the investigations that it was a failure or lapse in exercising due diligence on the part of the institution. 

The Chief Justice of India (CJI) also questioned why banks failed to intervene in the event of a sudden and unusually large amount of transfers from an account that are atypical of an accountholder’s established transaction history. The court also outlined mandatory preventive safeguards to tackle this, such as temporarily suspending suspicious transactions, automatically notifying the nearest police station, and conducting physical verification on suspicion of a digital arrest scam. The Bench noted that it would review the proposed 'know your customer' (KYC) Amendment Direction, 2026 by the RBI, which is scheduled to be notified by the end of this month (November 30) and operationalised by December 31, before they are permitted for rollout.

Attorney General R Venkataramani, who represented the Centre, confirmed that substantial work has been done to improve transaction detection and prevent such incidents. 

The court also directed the Directors General of Police (DGPs) and law enforcement agencies in all states and Union Territories (UTs) to submit their compliance reports, with details of registered FIRs and investigation status, along with suggestions for preventing, detecting, and prosecuting digital arrest offences. 

Further, the court directed the RBI to present a complete list of all authorised financial institutions before it when the plea comes up for consideration on November 23.