New Delhi: Supreme Court Banks must devise an artificial intelligence-based mechanism to flag all suspicious transactions in an account, raise alerts and suspend transfers until the transactions are verified by the account holder, it said on Monday. A bench of Chief Justice Surya Kant, Justice Joymalya Bagchi and Home Ministry NV Anjaria said the Home Ministry has found shocking misappropriation of nearly Rs 52,000 through cyber fraud, including “digital arrests”, between April 2021 and November 2025. The judges said banks’ IT applications designed for seamless transactions cannot be solely profit-oriented and must be able to detect abnormal transactions and verify authenticity.Banks must realize they are trustees of public funds: SC on cyber fraudThe directive comes against the backdrop of a growing number of examples of bank staff failing to take action despite unusually large amounts of money being withdrawn from the accounts of elderly people who have long worked at the bank.Attorney General (AG) R Venkataramani said the Reserve Bank of India has formulated a set of standard operating procedures for banks to thwart cyber fraud. The bench asked the ministry to review the standard operating procedures and notify their implementation across India. “In the face of excessive anxiety about profitability, banks must recognize that they are trustees of public funds. People put their money in banks because they trust them. These banks are becoming a huge liability to the public,” Judge Budge said.The CJI said courts are becoming recovery agents for banks and bank officials, in collusion with industrialists, grant huge loans indiscriminately and then use NCLAT and other courts to recover the funds.The Attorney General said the Home Office has set up a high-level interdepartmental committee to comprehensively review all aspects related to “digital arrests”. The committee will work under the chairmanship of the Special Secretary of the Ministry. The court asked the Reserve Bank of India to fulfill its role as a banking regulator and ensure the safety of retirees’ hard-earned money. “The problem is that banks favor business models, rightfully so, and in doing so, they either inadvertently or connivingly become platforms for the rapid and seamless transfer of stolen criminal proceeds,” Bench said.
