South Kolkata District Commission Holds UCO Bank Liable For Failure To Utilize CBS Facility To Transfer Matured FD Amount

Brief Facts:

The Complainants, being customers of the UCO Bank (“Bank”), possessed a Fixed Deposit Account that matured on 07.11.2021, with a matured value of Rs. 7,337/-. Upon maturity, they requested the Branch Manager to credit the matured amount to their savings account, where they had previously submitted KYC documents. Despite personal requests and submission of documents, the Branch Manager refused to credit the amount stating that the KYC details of the fixed deposit account didn't match with the details of the savings account.

The Complainants made verbal communications and visits to the Zonal Office of the bank but didn't receive a satisfactory response. Feeling aggrieved, the Complainant approached the District Consumer Dispute Redressal Commission-III, South Kolkata (“District Commission”) and filed a consumer complaint against the Bank.

In response, the Bank denied all allegations and contended that it had repeatedly requested the Complainants for KYC documents to facilitate the transfer of the matured Fixed Deposit Amount to their Savings Accounts. However, the Bank didn't present any supporting documents or evidence to substantiate the claims.

Observations by the District Commission:

The District Commission held that Core Banking Solution (CBS) plays a significant role in modern banking, facilitating seamless transactions and services across branches of the same bank. It held that under CBS, customers are not confined to their branch of account for banking transactions; rather, they can avail themselves of services from any branch within the CBS network.

The District Commission referred to the Reserve Bank of India (RBI) guidelines and emphasized the importance of periodic KYC updation to maintain accurate customer records. While acknowledging the convenience offered by CBS, the District Commission reiterated the necessity for compliance with KYC requirements, particularly in instances where a fixed deposit was opened on a declaration basis without prior KYC completion. It held that the Complainants must fulfil re-KYC formalities at the branch where the fixed deposit was originally opened, as mandated by RBI guidelines.

However, while acknowledging the validity of the Bank's stance regarding KYC mismatch between accounts, the District Commission held that the Bank failed to effectively utilize the provisions of CBS to address the issue. Despite the availability of CBS, the Bank neglected to resolve the matter efficiently. Therefore, the District Commission held the Bank liable for deficiency in services.

Consequently, the District Commission directed the Bank to transfer the matured fixed deposit amount with interest, adhering to RBI guidelines and completing re-KYC formalities at the branch where the fixed deposit originated. Additionally, the District Commission directed the Bank to pay a compensation of Rs. 20,000/- to the Complainants for mental agony, harassment, and litigation costs.

Case Title: Rina Roy and Others vs UCO Bank and Others

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