Relevance: GS III (Internal Security – Cyber Security) & GS III (Economy – Digital Banking) | Source: Indian Express; Ministry of Home Affairs (MHA)

1. The Context: A Psychological Siege

India is battling a surge in “Digital Arrest” scams—a sophisticated cyber-extortion where fraudsters impersonate police or CBI officials via video calls.

  • The Modus Operandi: Victims are psychologically coerced into believing they are under “virtual arrest” for money laundering or drug trafficking. They are forced to transfer funds to “verify” their innocence.
  • The Scale: With losses nearing ₹3,000 crore, the Ministry of Home Affairs (MHA) has set up an Inter-Departmental Committee (IDC) to devise urgent countermeasures.

2. The “Kill Switch” Mechanism

The committee is proposing a technological intervention to empower victims:

  • Emergency Freeze: A proposed “Kill Switch” button integrated into UPI and banking apps. If a user suspects a scam during a call, pressing this button would instantly freeze all debit transactions, preventing money from leaving the account.
  • Targeting Mule Accounts: The system aims to disrupt the “layering” process, where fraudsters quickly split stolen money into hundreds of Mule Accounts (rented bank accounts) to evade tracing.

3. A Safety Net: Fraud Insurance

Currently, cyber insurance covers “hacks” (technical breaches) but denies claims for “authorized push payments” (where the user is tricked into sending money).

  • The Proposal: A “Fraud Insurance Pool”, similar to the Terrorism Insurance Pool, to cover victims of social engineering.
  • RBI’s Stance: The RBI’s Payment Vision 2025 also suggests creating a Digital Payment Protection Fund (DPPF) to compensate customers for such liabilities.

UPSC Value Box

Concept / Institution

Relevance for Prelims

I4C (Indian Cyber Crime Coordination Centre)Nodal agency under MHA to tackle cybercrime. It manages the ‘1930’ Helpline and the National Cyber Crime Reporting Portal.
Mule AccountA bank account belonging to a legitimate person (often rented for small fees) used by criminals to receive and transfer illegal funds to obscure the money trail (Money Laundering).
Digital ArrestNot a legal term. Indian law does not recognize “Digital Arrest.” Police cannot arrest anyone via video call; physical presence and a warrant are mandatory.

Q. With reference to the institutional framework for combating cybercrime in India, consider the following statements:

  1. The Indian Cyber Crime Coordination Centre (I4C) operates under the Ministry of Electronics and Information Technology (MeitY).
  2. The “1930” helpline is a dedicated financial fraud reporting mechanism managed by I4C.
  3. The term “Digital Arrest” is a legally recognized procedure under the Bharatiya Nagarik Suraksha Sanhita (BNSS).

Which of the statements given above is/are correct?

(a) 1 and 2 only

(b) 2 only

(c) 1 and 3 only

(d) 1, 2 and 3

Correct Answer: (b)

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