Supreme Court tightens rules to curb 'digital arrests', RBI to frame SOPs to deal with mule bank accounts
The Supreme Court has issued a fresh set of nationwide directions in its suo motu case monitoring India's response to "digital arrest" frauds, including an order to the Reserve Bank of India to frame a standard operating procedure on mule bank accounts within four weeks. The order links financial regulation, policing architecture and platform design in a single remedy, and gives candidates a concrete example of judicially supervised administrative reform in cyber security.
What happened
A bench led by Chief Justice of India Surya Kant, with justices Joymalya Bagchi and V Mohana, considered the fourth status report of the Indian Cyber Crime Coordination Centre (I4C) under the Union home ministry, along with notes from Attorney General R Venkataramani and amicus curiae NS Nappinai. The court directed the RBI to prepare and circulate within four weeks a comprehensive SOP for mule accounts — accounts opened or used to receive and transfer proceeds of cyber fraud and money laundering — to be sent also to the registrar generals of all high courts. It ordered all states and Union territories to operationalise the grievance redressal and money restoration modules built under the home ministry's SOP of 2 January 2026, required the remaining states to notify State Cyber Crime Coordination Centres and adopt the e-Zero FIR mechanism within four weeks, and asked the Inter-Departmental Committee to examine a shared liability and victim compensation framework. MeitY, the Department of Telecommunications and I4C were told to study, with intermediaries, the feasibility of time-based restrictions on audio and video calls; the matter will next be heard on 16 September.
Why it matters
The court accepted that the government's coordinated effort had produced results, noting that complaints on the National Cyber Crime Reporting Portal fell from 123,672 in 2024 to 58,249 in 2025 and 16,377 up to 30 June this year, but held that "continued monitoring remains indispensable". Against the Attorney General's account of improved enforcement — over 36,000 cases investigated and more than ₹18 crore restored to victims — the amicus curiae argued that the fraud is still evolving and that victims need institutional support beyond existing legal remedies, proposing a technological "kill switch" for unusually long video calls of six to twelve hours. The gaps the court identified are federal as much as technical: only 14 states have operationalised State Cyber Crime Coordination Centres and the e-Zero FIR mechanism works in only 19 states, so a national remedy depends on state-level compliance.
Prelims: Mule accounts — accounts used to receive and transfer proceeds of cyber fraud · Indian Cyber Crime Coordination Centre (I4C), under the Union home ministry · e-Zero FIR mechanism and State Cyber Crime Coordination Centres · National Cyber Crime Reporting Portal and Cyber RMS; grievance redressal and money restoration modules · ₹10 crore threshold for mandatory CBI investigation in cyber fraud cases · Role of amicus curiae in a suo motu Supreme Court proceeding.
Mains (GS-III): Judicial supervision of cyber fraud enforcement has filled gaps that regulators and state police forces left open, but it is no substitute for institutional capacity. Examine with reference to recent directions on mule accounts, money restoration and victim compensation.
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Background
The case is a suo motu proceeding initiated to monitor the country's response to digital arrest frauds, in which fraudsters impersonate police officers, CBI officials, judges or other government functionaries and extort money through prolonged video calls and psychological intimidation. High-value digital arrest cases are investigated by the CBI, which has registered 10 such cases and, in one investigation, identified 238 victims, traced 67 first-layer bank accounts, tracked transactions worth nearly ₹80 crore and searched 93 locations across 16 states, while other complaints are handled by state police. The court has asked the Inter-Departmental Committee to keep examining whether the existing ₹10 crore threshold for mandatory CBI investigation should be lowered and whether frauds by the same organised network should be aggregated.