Bengaluru: A Karnataka High Court ruling has brought attention to the financial and legal consequences faced by victims of digital arrest scams, after it declined to cancel criminal proceedings against a Bengaluru woman who allegedly borrowed Rs 50 lakh under pressure from cyber fraudsters.
The woman claimed that in September 2024, callers posing as FedEx staff, Mumbai police personnel and an RBI official threatened to implicate her in a drug-related case. They allegedly pressured her into securing a personal loan and transferring the money to three accounts, promising a clearance certificate.
Although she approached the police and the RBI ombudsman, ICICI Bank initiated criminal proceedings in May 2025 after a payment instruction for Rs 52.41 lakh was dishonoured.
On October 16, Justice M Nagaprasanna declined to quash the proceedings, observing that the allegations required examination through evidence. The court noted that the loan and subsequent transfers had been authenticated using her credentials. However, it did not determine whether she had been coerced or settle her repayment liability.
Cybercrime officials have raised concerns about banks approving large loans without adequate verification, particularly when transactions differ from a customer’s usual financial behaviour. They have called for direct borrower verification and additional safeguards for vulnerable customers.
The Supreme Court is also examining the issue. On October 29, it indicated that banks could face compensation liabilities if frauds resulted from inadequate safeguards, while officials found colluding with criminals could face prosecution.
Meanwhile, the RBI is considering revised KYC rules, temporary debit restrictions on suspicious transactions and a proposed mechanism allowing customers to immediately halt banking operations when fraud is suspected.
