Fraudulent Electronic Transfer, Customer Not Liable, Bangalore District Commission Orders SBI To Refund, Pay Compensation And Legal Costs
The Additional District Consumer Disputes Redressal Commission-III, Bangalore (Karnataka) bench comprising Sri Shivarama K. (President), Sri Chandrashekar S. Noola (Member) and Smt. Rekha Sayannavar (Member) held SBI liable for an unauthorized fraudulent transaction from the complainant’s bank account. The District Commission cited a circular issued by the RBI which exempts...
The Additional District Consumer Disputes Redressal Commission-III, Bangalore (Karnataka) bench comprising Sri Shivarama K. (President), Sri Chandrashekar S. Noola (Member) and Smt. Rekha Sayannavar (Member) held SBI liable for an unauthorized fraudulent transaction from the complainant’s bank account. The District Commission cited a circular issued by the RBI which exempts customers from liability for unauthorized electronic banking transactions.
Brief Facts:
Mr K. Venkatasubbaiah (“Complainant”) had 2 accounts in the State Bank of India (“SBI”). On October 30th, 2021, an amount of Rs. 64,000/- was fraudulently transacted by an unknown person from his account. The Complainant reported the fraudulent transaction to the cyber police and the concerned SBI branch in Hyderabad. The Complainant further alleged that till the filing of the complaint with the SBI, the bank took no effort to trace the transaction or initiate any kind of refund. Feeling aggrieved, the Complaint filed a consumer complaint in the Additional District Consumer Disputes Redressal Commission-III, Bangalore Urban, Karnataka (“District Commission”). The SBI did not provide a defence or file a version in response to the allegations.
Observations by the Commission:
The District Commission held that the SBI had failed to safeguard the complainant's accounts and had not effectively traced the fraudulent transaction, despite receiving the complainant's written complaint. Crucially, the District Commission referenced a circular issued by the Reserve Bank of India (RBI) in 2017, titled “Consumer Protection – Limiting Liability of Customers in Unauthorized Electronic Banking Transactions”. The circular categorized the complainant as a "zero liability" customer, rendering him exempt from liability for the unauthorized electronic banking transaction.
Consequently, the District Commission ruled in favor of the complainant directing the SBI to refund the sum of Rs. 64,000/-, along with interest at a rate of 9% per annum from October 30, 2021. Additionally, the SBI was instructed to compensate the complainant with Rs. 25,000/- for the mental distress and financial hardship he endured, as well as Rs. 5,000/- towards litigation costs.
Case Title: K. Venkatasubbaiah vs Manager, State Bank of India
Case No.: CC/217/2023
Advocate for the Complainant: Party-in Person
Advocate for the Respondent: J Satish Kumar