Recently, Consumer court in Kerala held that a bank is liable if a customer experiences financial losses stemming from unauthorized withdrawals from their account.

While directing State Bank of India (SBI) to compensate a customer for an unauthorised withdrawal of money from his bank account, the District Consumer Disputes Redressal Commission at Ernakulam made this observation.

Further, the Court rejected SBI's contention that there was no deficiency of service or unfair trade practice on its part since the customer, Salim, had been informed about the withdrawal through SMS notifications.

"In the instant case the complainant is not duty bound to read all the messages and some among them have been received in the odd hours of night by the complainant," the order stated.

Case Brief -

In the said matter, the Court was hearing a complaint filed by one Salim PM, who lost ₹ 1.6 lakh due to fraudulent withdrawal of money from his bank account back in 2019. 

Earlier, banking ombudsman directed State Bank of India to pay amount of ₹80,000 to Salim for his loss. An additional amount of ₹10,000 was also credited to his account.

Therefore, Salim approaches the consumer court seeking the payment of the remaining ₹70,000 that he had lost.

A bench of district consumer forum President DB Binu and members V Ramachandran and Sreevidhia TN allowed the claim to the extent of ₹ 85,000 (₹70,000 for the loss, ₹10,000 as compensation and ₹5,000 as costs of litigation).

In its orders the Court held that ''Since the bank is providing a service to the customer, it owes a duty to exercise reasonable care to protect the interest of the customer. This includes a duty to take steps to prevent unauthorised withdrawals from a customer's bank accounts.''

In the complaint, Salim claimed alleged that a fraudulent withdrawal of money took place three times from his bank account due to which he lost a total sum of ₹1.6 lakh.

Further,  Salimsubmitted when he went to the ATM to withdraw money, he was shocked to find only ₹ 3,011 was left. He claimed that an amount of ₹ 1.6 lakhs was lost from his bank account.

The consumer forum delivered its ruling in the case on July 29, when it ordered SBI to pay ₹85,000, in addition to the ₹90,000 already paid after the earlier banking ombudsman ruling