Now Reading: Karnataka HC: banks liable for unauthorised online transactions
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Karnataka HC: banks liable for unauthorised online transactions
The Karnataka High Court has dismissed a petition by State Bank of India against a consumer commission order that directed it to recredit Rs 1.99 lakh lost by a customer in an…
The Story in Brief
The Karnataka High Court has dismissed a petition by State Bank of India against a consumer commission order that directed it to recredit Rs 1.99 lakh lost by a customer in an online fraud. The court said banks handling public money must make their systems robust and foolproof, and cannot escape liability under the RBI's zero liability clause if customers report fraud within time.
The fraud occurred in July 2022 when 71-year-old Pradosh Kumar downloaded a fraudulent app. His account was debited Rs 1.99 lakh and Rs 25,000. He informed SBI within three hours. While Rs 25,000 was recredited, the bank refused the larger sum. Consumer commissions ordered full recredit plus Rs 25,000 compensation, which the high court upheld.
The Indian Opinion
Banks often claim that customers share OTPs voluntarily and blame them for fraud. But the court rightly noted that the RBI circular protects customers who report unauthorised debits promptly. This ruling reminds banks that public trust matters more than convenience. The real test is whether banks will now invest in stronger fraud detection instead of shifting blame. Will the RBI enforce compliance with its own zero-liability guidelines more strictly?
Source: deccanherald.com
This story was synthesised by AI from the source linked above.
