The Telangana High Court has raised serious concerns about the role of banks in cyber fraud cases, focusing particularly on the State Bank of India (SBI) Keezhmad branch in Ernakulam, Kerala. This comes after an elderly victim from Hyderabad lost a significant amount of money due to an elaborate cyber scam.
How the Fraud Unfolded
The case began when 80-year-old AV Mohan Rao, from Gopanapally, Hyderabad, filed a writ petition. Rao had been deceived in a cyber fraud scheme known as “digital arrest fraud,” where scammers convinced him to transfer ₹50 lakh from his Punjab National Bank (PNB) account in Yusufguda, Hyderabad.
The funds were sent via RTGS (Real-Time Gross Settlement) to an SBI Keezhmad branch account registered under the name “Bharat Enterprises.” Shockingly, this fraudulent account was allegedly used to siphon off ₹5 crore from multiple victims across the country in just one day.
Court’s Investigation and Concerns
During the hearing, Justice NV Shravan Kumar questioned the SBI branch’s actions and demanded to know if the bank had followed Reserve Bank of India (RBI) guidelines when allowing the opening of the Bharat Enterprises account. He was particularly concerned about the bank’s failure to detect suspicious activity when such a large sum of money was deposited and immediately withdrawn within 24 hours.
Justice Kumar has ordered the SBI branch manager to provide an affidavit explaining the account-opening process and detailing compliance with RBI’s anti-fraud and Know Your Customer (KYC) protocols. The response must be submitted by April 5.
Rapid Withdrawal Raises Red Flags
According to the cyber police investigation, the funds that Mohan Rao transferred were quickly withdrawn after reaching the Bharat Enterprises account. This was part of a larger scam where ₹5 crore had been deposited and then withdrawn from the same account, leaving only ₹50 lakh, which has since been frozen.
SBI’s Response and Dilemma
The bank acknowledged the transactions but expressed confusion over multiple court orders issued in different fraud cases. SBI explained that it was unclear about which victims should receive the remaining ₹50 lakh due to conflicting instructions from the courts. This confusion, combined with the low account balance, has prevented the bank from releasing the funds to any of the victims so far.
Court’s Next Steps
Justice Kumar emphasized the importance of strict adherence to RBI regulations to prevent future fraud cases. He ordered the SBI branch manager to clarify how the fraudulent account was opened and whether the necessary verification steps were followed.
The court aims to ensure better oversight in the banking system to protect customers from cyber fraud. It also seeks to resolve the issue of compensating the victims affected by this large-scale scam.
This case highlights the growing threat of cyber fraud and the need for tighter regulations, faster fraud detection, and better communication between banks and law enforcement agencies.
