The Delhi High Court ordered SBI to pay Rs. 2.6 lakhs at 9% annual interest and for customer distress Rs. 25,000 as compensation was directed to be paid.
The Delhi High Court has ordered the State Bank of India (SBI) to recover Rs 100 crore stolen from the account of a 55-year-old man in a cyber fraud incident three years ago. 2.6 lakh has been ordered to be reimbursed. Besides, the court directed the bank to pay 9% annual interest on the amount and a compensation of Rs 25,000 for the distress of the petitioner.
In the judgment delivered by Justice Dharmesh Sharma, SBI was blamed for “manifest service failure” for its delayed and negligent response to the fraud. Despite being alerted to the fraudulent withdrawal, SBI failed to act promptly and adequately, which the court described as “” Lax, flawed and not timely.” Justice Sharma emphasized that banks should prioritize the security of their customers, responding quickly and effectively whenever fraud is detected.
The case dates back to 2021 when the petitioner was a victim of a phishing and vishing scam. He received a fraudulent link on his mobile phone, warning him that his SMS service would be terminated. After clicking on the link, two huge sums from his account – Rs. 1 lakh and Rs. 1.6 lakh – was withdrawn. The petitioner asserted that he did not share any one-time password (OTP) with the fraudsters, even though the funds were transferred without his knowledge or consent.
On coming to know of the unauthorized withdrawal, the applicant immediately informed the SBI. However, the bank’s response is not satisfactory. The court noted that SBI had failed to take immediate steps like initiating chargebacks, trying to recover funds or freezing suspect accounts.
Justice Sharma specifically criticized the SBI for not taking any preventive measures even when it became clear that the fraudsters had links with other banks including IDFC Bank and One97 Communications. The court pointed out that the bank’s failure to act quickly and decisively exemplified a serious lack of customer service, particularly in cases of fraud.
The court highlighted the critical role of effective customer service, especially when fraud has been committed. It found SBI’s attitude to be “grossly unsatisfactory”, holding the bank responsible for what it termed “serious service deficiencies”.
By holding the SBI accountable for its failure to act quickly, the Delhi High Court has set a precedent that banks should take a more proactive and responsible approach to handling fraud cases, protecting both their customers and their reputation.