Now Reading: Make online banking robust, Karnataka HC tells banks in fraud case
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Make online banking robust, Karnataka HC tells banks in fraud case
The Karnataka High Court has dismissed a petition by the State Bank of India (SBI) challenging a consumer forum order to pay Rs 1.99 lakh to a Bengaluru customer whose account was…
The Story in Brief
The Karnataka High Court has dismissed a petition by the State Bank of India (SBI) challenging a consumer forum order to pay Rs 1.99 lakh to a Bengaluru customer whose account was fraudulently debited. The court directed banks to make their online banking systems 'robust, foolproof and impossible to be misused', noting that public money is at stake. The customer, Pradosh Kumar, had downloaded a fraudulent app on July 19, 2022, leading to unauthorised debits of Rs 1.99 lakh and Rs 25,000.
The bench cited a July 2017 RBI circular that holds banks liable for unauthorised electronic transactions under the 'zero liability clause', provided the customer reports the fraud within the stipulated period. The customer had emailed the bank within three hours. The district, state, and national consumer commissions had all ruled against SBI. The High Court upheld those orders.
The Indian Opinion
Banks routinely blame customers for sharing OTPs, but the Karnataka High Court has rightly reminded them of their own duty. The RBI's zero-liability clause already puts the onus on banks unless customer negligence is proved. This ruling is a check on the lazy narrative that fraud is always the user's fault. Watch how quickly SBI and other banks upgrade their transaction monitoring instead of fighting compensation cases.
Sources (2): deccanherald.com, newindianexpress.com
This story was synthesised by AI from the 2 sources linked above.
Updated: this story now draws on 2 sources.
