- Digital arrest scams represent a sophisticated form of cyber fraud where scammers impersonate law enforcement agencies to extort money from victims under false pretexts of criminal investigations. - The Supreme Court and RBI are addressing issues regarding bank liability, emphasizing the legal and financial accountability of financial institutions in safeguarding customers against unauthorized or fraudulent transactions. - The issue highlights systemic vulnerabilities in the banking sector, including the proliferation of mule accounts and lax Know Your Customer (KYC) norms, prompting tighter regulatory oversight. - Combating digital arrest scams requires a multi-pronged approach involving strict enforcement, consumer financial literacy, robust cybersecurity frameworks, and prompt grievance redressal mechanisms. - **Digital Arrest Scams:** A sophisticated cyber fraud where criminals pose as law enforcement or government officials via video calls, intimidating victims with fake arrest warrants and forcing them to transfer funds under virtual confinement. - **Reserve Bank of India (RBI):** India's apex banking institution responsible for regulating monetary policy, currency issuance, and supervising the banking sector, including framing guidelines for digital banking security and customer liability. - **Supreme Court:** India's highest judicial tribunal, which has recently asserted strict bank accountability and mandatory compensation rules for financial cyber fraud victims due to lapses in due diligence. **Introduction** This article explores the growing menace of 'digital arrest' scams in India, examining the legal and regulatory responses from the Supreme Court and the Reserve Bank of India (RBI) regarding bank liability, consumer protection, and systemic vulnerabilities in the banking sector that facilitate financial cyber fraud. **Core Issue and Detailed Points** - Digital arrest scams represent a sophisticated form of cyber fraud where scammers impersonate law enforcement agencies to extort money from victims under false pretexts of criminal investigations. - The Supreme Court and RBI are addressing issues regarding bank liability, emphasizing the legal and financial accountability of financial institutions in safeguarding customers against unauthorized or fraudulent transactions. - The issue highlights systemic vulnerabilities in the banking sector, including the proliferation of mule accounts and lax Know Your Customer (KYC) norms, prompting tighter regulatory oversight. - Combating digital arrest scams requires a multi-pronged approach involving strict enforcement, consumer financial literacy, robust cybersecurity frameworks, and prompt grievance redressal mechanisms. **Key Statutory Bodies, Acts & Concepts** - **Digital Arrest Scams:** A sophisticated cyber fraud where criminals pose as law enforcement or government officials via video calls, intimidating victims with fake arrest warrants and forcing them to transfer funds under virtual confinement. - **Reserve Bank of India (RBI):** India's apex banking institution responsible for regulating monetary policy, currency issuance, and supervising the banking sector, including framing guidelines for digital banking security and customer liability. - **Supreme Court:** India's highest judicial tribunal, which has recently asserted strict bank accountability and mandatory compensation rules for financial cyber fraud victims due to lapses in due diligence.