Not conforming to 'know your customer' norms while opening accounts, which were used for siphoning off an account holder's money, proved costly for a public sector bank. The bank has been ordered to pay Rs5.50 lakh as compensation to the complainant who was at the receiving end of the fraud.
Not conforming to 'know your customer' norms while opening accounts, which were used for siphoning off an account holder's money, proved costly for a public sector bank. The bank has been ordered to pay Rs5.50 lakh as compensation to the complainant who was at the receiving end of the fraud.
"I have gone through the websites indicating protection offered by various banks abroad to their customers who use electronic channels to conduct transactions. Most banks in the US and other developed countries insure their customers against online/ATM frauds beyond a liability of $50... On similar lines, this January, Banking Codes and Standard Board of India unit issued Code of Bank's Commitment, wherein customers of such fraud will only be liable to the extent of Rs10,000 and the bank has to make good the rest of the amount, but acceptance of this code by banks is not visible," said Rajesh Aggarwal, principal secretary of the state IT department and the adjudicating officer under the IT Act, in his recent order in the case.
The complainant Bal Kishan Rai holds two pension accounts with the Punjab National Bank. On March 1 and 2, 2010, Rs9,67,320 were fraudulently transferred from both accounts via 45 fraudulent transactions to 14 different accounts held with the bank at different branches. On March 4, 2010, the complainant came to know about the fraud and immediately informed the bank. He also lodged a complaint at the Kharghar police station. Rs4,50,218 has been recovered.
Rai has claimed damages worth Rs7,23,102 as compensation, including loss of interest and legal fees, from the bank.
However, the bank claimed the complainant "has not come with the clean hands (sic) and has concealed facts of (the) present matter." It said Rai has failed to disclose before the forum his letter dated March 4, 2010, wherein he stated, "I might have responded unknowingly to an email asking for my password." It added that they had been proactive in lodging an FIR, while the complainant lodged one a whole month later.
"The respondent acted diligently after intimation by the complainant and could freeze Rs4,50,743, which it remitted to the complainant as early as May 4, 2010. Respondent compiled the entire list of account holders/beneficiaries and handed (it) over to the police while lodging the FIR," the bank and its branch manager said. Rai had also not availed of SMS alert services, which he subscribed to only in November 2010 "as an afterthought".
"Thus, the complainant has been negligent in operating and using netbanking and has violated terms and conditions set out by respondent," the bank claimed.
The police said all the documents submitted by the beneficiaries while opening the 14 accounts in which Rai's money was transferred were found to be forged, as none of them could be traced based on the information provided in the documents.
Aggarwal said, "That all the 14 accounts were created on fake papers is a telling commentary on the bank's laxity. Now, PANs can be easily checked by software for genuineness. It's found that two PANs given at the time of opening the accounts were fake."
"...I hold the Respondent(s) guilty of breaches under IT act. However, the complainant has also been lax, and must share part of the loss (of interest and legal fees etc)," Aggarwal noted in his order.
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