New Delhi, Oct. 30 -- The Supreme Court on Thursday said that the mechanism to prevent digital arrest frauds must necessarily aim to prosecute bank officials involved for collusion and carry a compensation clause that mandates financial institutions to compensate the victims in the event such fraud occurs as a result of the bank's failure. The court said that in a democracy, it is hard to believe that citizens would imagine they can be arrested over a call on the mobile phone and said that banks could consider having a preventive system in place which can flag unusually high value transactions in a bank account going by the past history of transactions. "Thousands of crores are being looted and still you do not have strong measures in place. This money is being lost to the economy. Where is the accountability clause in your regulations so that when a fraud takes place, compensation can be given to victims besides prosecuting the bank officials who are found to be involved," the bench said. On being informed that the Reserve Bank of India (RBI) is in the process of finalising and notifying the Draft KYC Guidelines by November 30 where due diligence on part of banks is under consideration, the court said it would like to go through the document (before it is finalised) for passing further orders. The bench headed by Chief Justice of India (CJI) Surya Kant said, "The regulatory measures proposed by RBI must mandate for financial institutions to indemnify digital arrest or cyber fraud victims for providing suitable compensation not less than the amount lost by the customer on being found that the fraud has taken place as a result of failure of the financial institution in the commission of the act or incident." The bench, also comprising justices Joymalya Bagchi and V Mohana said, "Banks must be held accountable. If there is no liability placed under the proposed guidelines, we will ensure it." The court pointed out that RBI being the banking regulator should not just pass guidelines but ensure they are enforced by imposing strict liability on banks to act against such crimes. The court said that banks have so many remedies to redeem their lost amounts through the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) and the Insolvency and Bankruptcy Code (IBC), however, the same is not available to customers who lose their amount. It gave the example of cases involving builder-bank nexus where the RBI's Master Circular holds the field but yet no remedy is available to homebuyers who are reeling under the subvention scheme. "Strict liability of banks must be provided and in case of breach, accountability must be fixed," the court remarked....