Hyderabad’s ₹5.66 crore ‘digital arrest’ scam shines spotlight on vulnerabilities in Indian banking

Hyderabad woman loses ₹5.66 crore in digital scam; experts call for banking system overhaul to prevent fraud.

A 69-year-old mother of two from Hyderabad’s Basheerbagh lost a staggering ₹5.66 crore in a ‘digital arrest’ scam. The amount was transferred from multiple bank accounts belonging to the victim and her two daughters in a series of 14 transactions over 20 days, starting November 14.

After the victim was made to believe that her mobile number linked to Aadhaar was involved in a money-laundering case, she was asked to transfer all her funds for verification, on the promise that they would be refunded. The woman transferred her life savings to at least nine different accounts, including those in HDFC, YES Bank, ICICI Bank, Bandhan Bank and IndusInd, provided by the scammers over a Skype call.

The three fraudsters, posing as officials from Telecom Regulatory Authority of India (TRAI), Reserve Bank of India (RBI) and Central Bureau of Investigation (CBI), ‘guided’ the victims with what they should tell the bankers when questioned about the large transactions. Purchasing a car or property; charity work; and personal reasons were among their suggestions.

Until December 3, the women made multiple visits to Canara Bank, Union Bank of India and Andhra Pradesh Mahesh Cooperative Urban Bank—where they have accounts—for premature closure of their fixed deposits (FDs) and transferring funds through Real Time Gross Settlement (RTGS), and no one took notice of the massive scam unfolding.

Five days later, on December 8, when the victim enquired about the refund, she was asked to visit the nearest CBI office in Sultan Bazaar, where she was informed that she had been scammed.

The series of events in this case and many others reported across the country highlight gaps in the banking system.

Senior officers from various Indian banks, cybersecurity experts and law enforcement officials pointed to the lack of standardised systems to identify patterns of fraudulent transactions and called for overhaul in customer verification across banks.