Fraudulent ATM Card Usage, Vijayapur District Commission Orders SBI To Compensate Rs 8 Lakhs To Customer

Brief Facts:

Raghuveer (“Complainant”), a soldier in Indian Army, held an S.B. (Savings Bank) Account with The State Bank of India (“Bank”). He possessed two ATM Cards, one for himself and one for his wife. On October 31, 2021, he visited the Bank's branch for a withdrawal but discovered his ATM Card was missing. He withdrew Rs. 20,000 in two transactions. Despite tracing the card and contacting customer care to block it, an unknown person misused his information to fraudulently avail a loan amounting Rs. 8,00,000 via SBI Yono App. The Bank informed the Complainant of this when he issued a check on November 4, 2021. The Complainant denied any loan application or receipt of the loan amount.

Disappointed with the service of the Bank, the Complainant filed a complaint in the District Consumer Disputes Redressal Commission, Vijayapur, Karnataka (“District Commission”). He contended that the bank negligently allowed the fraudulent loan application, leading to significant financial loss and mental distress. The Complainant sought a direction against the Bank to pay Rs. 16,00,000/- towards negligence and deficiency in service.

On the contrary, the Bank contended that the Complainant withdrew Rs. 20,000 via SBI Yono App transactions and applied for a loan amounting to Rs. 8,00,000, through the bank, which was credited to the Complainant’s account. The Bank claimed that the Complainant himself provided necessary details to block his lost ATM Card, which were then misused by unknown persons. As a result, the Bank should not be held liable for a 3^rd-party’s fraudulent activities.

Observations of the Commission:

The District Commission considered the evidence presented by both parties. The Complainant demonstrated his withdrawal and loss of the ATM Card, while the Bank presented the alleged loan application details and associated transactions.

The District Commission acknowledged that fraudulent cases involving ATM Card information misuse are increasingly common, and banks bear a responsibility to investigate and verify transactions. Reference was made to precedent cases, such as State Bank of India vs. Dr. J.C. Kataky and HDFC Bank Ltd. vs. Hemant Narayan Devande, wherein banks were held liable for not investigating fraudulent transactions involving their customers.

It was further noted that the Bank failed to adequately investigate the fraudulent loan application and transactions, indicating a deficiency in their service. Therefore, the District Commission found in the affirmative that the Bank displayed a deficiency in service by not adequately investigating and preventing the fraudulent loan application and associated transactions.

Resultantly, the Bank was directed to pay a sum of Rs. 8,00,000 (Eight Lakhs Only) with interest at 6% per annum from the date of the complaint until realization, to the Complainant. The Bank was further directed to pay a sum of Rs. 5,000 towards mental agony and Rs. 2,000 towards the cost of litigation.

Case: Raghuveer vs The Manager, The State Bank of India

Case No.: COMPLAINT NO: 99/2022

Advocate for the Complainant: R.G.Deshpande, Adv.

Advocate for the Respondent: S.K.Hakki, Adv.

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