Legal News for March 2026
Banks must block suspect money transfers, says SC
The Supreme Court said banks must devise an AI-based mechanism to flag all suspicious transaction from an account, issue alerts, and suspend the transfer until the transaction is authenticated with the account holder.
A bench of Chief Justice Surya Kant, Justices Joymalya Bagchi and N V Anjaria said the home ministry has flagged the alarming siphoning of nearly Rs 52,000cr between April 2021 and Nov 2025 through online fraud, including “digital arrest”. The bench said the banks’ IT applications devised for seamless transactions cannot be only profit-oriented and must be equipped to detect unusual transactions and verify genuineness.
The direction comes against the backdrop of growing number of instances where bank personnel failed to act despite unusually large withdrawls from accounts of senior citizens who had long banked with them.
Attorney general (AG) R Venkataramani said RBI has devised an SOP for banks to thwart cyber frauds. The bench asked the ministry to examine the SOP and notify them for pan-India implementation. Justice Bagchi said, “In the over-anxiety of making profits, banks must realise they are trustees of public money.
People have deposited their monies in banks because they trust them. These banks are becoming a huge liability to the public.” The CJI said that the courts are becoming recovery agents for the banks, whose officials, in collusion with industrialists, grant huge loans recklessly and then use NCLAT and other tribunals to recover money.
The attorney general said the home ministry has constituted a high-level inter-departmental committee to comprehensively examine all facets related to ‘digital arrest’. The committee will work under the chairmanship of special secretary in the ministry. The court asked RBI to discharge its duties as the regulator of banking sector to ensure security of hard-earned money of retired people. “The problem is banks are more into business mode, and naturally so, and in doing that, they are becoming, either innocently or connivingly, platforms through which there is a swift and seamless transmission of stolen proceeds of crime,” bench said.
RERA doing nothing except facilitatiang defaulting builders
The Supreme Court said it is high time all states rethought the constitution of the real estate regulatory authority (RERA) as the institution is doing nothing, except facilitating defaulting builders.
A bench of Chief Justice Surya Kant and Justice Joymalya Bagchi said the people for whom RERA was created were “completely depressed, disgusted and disappointed” and asserted that it won’t mind if the institution was abolished.
The observations came from the bench, which permitted the Himachal Pradesh government to shift the office of RERA to the place of its choice.
The bench issued notice on a plea filed by the Himachal Pradesh government and others challenging an order of the Himachal Pradesh High Court in a matter pertaining to the shifting of the state RERA office from Shimla to Dharamshala.
The top court stayed the high court’s December 30 direction.
In its petition filed in the apex court through advocate Sugandha Anand, the state said the decision to shift the Himachal Pradesh RERA office from Shimla to Dharamshala was taken to “decongest” Shimla city, and it was purely on administrative considerations.
Senior advocate Madhavi Divan, appearing for the state, told the bench about the matter and said, “This is about the RERA, which we seek to shift to Dharamshala”.
An advocate, appearing for the respondent, said 90 per cent of the projects with which the authority deals are in Shimla, Solan, Parwanoo and Sirmaur, which are within a radius of a maximum of 40 km.
He said around 92 per cent of complaints which are pending before RERA are only from these districts, and there are only 20 projects in Dharamshala.
Small digital fraud victims set to get up to Rs. 25K refund
In a first-of-its-kind move, bank customers who fall victim to small-value digital frauds will be eligible for compensation of up to Rs. 25,000 for the first such incident, the Reserve Bank of India (RBI) announced.
The proposed compensation will be a one-time relief and will cover up to 85 per cent of the amount lost, or Rs. 25,000, whichever is lower, said RBI Governor Sanjay Malhotra during a media interaction following the monetary policy announcement.
“…as long as (customers) are defrauded, whether on their own accord or someone else’s, no questions asked, we will compensate them as long as it is unintended,” he said.
A substantial portion of the compensation will be borne by the regulator, with banks contributing 15 per cent, while customers will absorb a 15 per cent hit. The RBI said it will formulate a detailed framework for customer compensation.
The move comes against the backdrop of a rising number of digital fraud cases, with customers increasingly losing hard-earned savings to such incidents.
“We have a Deposit Education and Awareness (DEA) Fund, where adequate surplus has accrued over a period of time. We may use that fund (for compensation),” said Swaminathan J, deputy governor, RBI.
Swaminathan J added that more than two-thirds of fraud cases are of small value, though they account for about 15 per cent of total fraud value.
According to RBI data, card and internet frauds accounted for 66.8 per cent of total fraud cases in 2024-25. Nearly 13,500 cases of card and internet fraud were reported during the year, involving Rs. 520 crore. In 2023-24, more than 29,000 such cases were reported, amounting to Rs. 1,457 crore, while in 2022-23, nearly 6,700 cases involving Rs. 277 crore were recorded.
Separately, the central bank has proposed issuing comprehensive instructions to regulated entities on advertising, marketing and sales of financial products and services to curb mis-selling.
“Mis-selling of financial products and services by any regulated entity has significant consequences for both customers and the entity concerned. There is a felt need to ensure that third-party products and services sold at bank counters are suitable to customer needs and commensurate with the risk appetite of individual clients,” the RBI said.