The Hindu : Andhra Pradesh / Hyderabad News : SBI fined for service deficiency

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Monday, Jun 30, 2008
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Andhra Pradesh

Andhra Pradesh - Hyderabad

SBI fined for service deficiency

Staff Reporter

Transactions continued on stolen ATM

ATM owner had notified bank to block the card
Consumer Court orders bank to pay money withdrawn fraudulently

HYDERABAD: The State Bank of India (SBI), which had allowed withdrawal of money on a lost ATM card, despite the owner notifying the bank to block the card, was ordered to pay the money withdrawn fraudulently.

The bank’s failure to stop transactions on the ATM card were considered as a deficiency in service by the A.P. Consumer Disputes Redresseal Commission, which upheld the order by Rangareddy Forum.

The complainant M. Kista reddy, a retired employee of P&T Colony in Chaitanyapuri, had an account in SBI, Chaitanyapuri branch. He lost his ATM card on April 18, 2006 and had immediately notified the bank with a request to block it.

Card blocked

The bank blocked the card, issued a confirmatory letter and a duplicate card later. However, Mr. Reddy found that Rs. 75,026 was withdrawn from his account between June 12 and 16, 2006 fraudulently.

When Mr. Reddy drew the attention of the bank to the withdrawals seeking reimbursement, the bank refused to pay.

Subsequently, a case was filed seeking compensation in the Ranga Reddy District Consumer Forum. The Bank had agreed before the forum that the money was withdrawn from Mr. Reddy’s account by somebody else illegally.

However, the Bank refused to compensate him arguing that it had followed all technical procedures required to block the card and that it could not be held responsible. It also argued that the person who withdrew the money could be an acquaintance to Mr. Reddy as he used the secret pin correctly to withdraw the money.

Bank’s responsibility

The District Forum held that it was bank’s responsibility to maintain its network systems in a foolproof way. It ordered the Bank to pay Rs. 75,026 with interest of nine per cent per annum from June 16, 2006 till the date of repayment to Mr. Reddy.

It also ordered the bank to pay Rs. 5,000 as compensation and Rs. 2,000 towards costs.

The bank appealed against the order in the State Commission, which was rejected in the admission stage itself, while upholding the district forum order.

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