A high-level committee constituted by the Ministry of Home Affairs (MHA) is examining the introduction of a ‘kill switch’ mechanism that would allow individuals to instantly freeze all banking transactions if they suspect they are being targeted by a digital arrest scam, officials familiar with the matter said.
Emergency stop for banking transactions
The proposal is being discussed by an inter-departmental committee formed in late December to address the growing threat of digital arrest frauds. The idea under consideration involves integrating an emergency ‘kill switch’ into banking and payment applications, such as UPI or mobile banking apps.
“A user should be able to press one button on their payment or banking app, and immediately no transaction should be possible from that account,” a senior government official said, requesting anonymity.
The committee is also exploring whether potentially fraudulent transactions can be automatically flagged and temporarily blocked from being routed through multiple mule accounts, a common tactic used by cybercriminals to launder stolen funds.
Insurance cover for fraud losses under discussion
In addition to technical safeguards, officials said an insurance-based mechanism to cover fraud-related losses in the banking system is also being examined. This comes amid mounting concerns that existing compliance and audit frameworks are insufficient to deal with sophisticated cyber-enabled frauds.
The Reserve Bank of India has recently raised questions on whether traditional risk-transfer tools are adequate and whether insurance solutions should play a larger role in managing fraud-related risks in the financial system.
Committee composition and court oversight
The MHA’s inter-departmental committee is chaired by the Special Secretary (Internal Security) and includes senior representatives from the Ministry of Electronics and IT, Department of Telecommunications, Ministry of External Affairs, Department of Financial Services, RBI, CBI, NIA, Delhi Police, and the Indian Cyber Crime Coordination Centre (I4C).
The panel was formed following the Supreme Court taking suo motu cognisance of digital arrest scams last October, after reports suggested victims across India lost nearly ₹3,000 crore to such frauds.
Rising digital fraud concerns
According to RBI data, India recorded nearly 24,000 fraud cases involving over ₹34,000 crore in 2024–25. Experts say the proposed kill switch and a possible fraud insurance pool could significantly strengthen consumer protection as India’s digital banking ecosystem continues to expand.
Officials said detailed recommendations are expected after further consultations with banks, regulators, insurers, and technology platforms.