Describing the menace of ‘ digital arrest ’ as “the biggest financial fraud… on the economy of the country… running into thousands of crores of rupees,” the Supreme Court said Thursday it proposed to issue a direction making banks compensate victims and face prosecution if it’s established that failure of due diligence on their part resulted in such a fraud.

A three-judge bench, comprising Chief Justice of India Surya Kant, Justice Joymalya Bagchi and Justice V Mohana, pulled up the Reserve Bank of India (RBI) over the spate of digital arrest cases, saying it was “soft pedalling” the issue.

“The problem is bank officials are involved in it… There is soft pedalling by the RBI. Unfortunate.…