SBI UPI Fraud Case: Consumer Commission orders SBI to pay Compensation

The Chandigarh State Consumer Disputes Redressal Commission has upheld an order directing the State Bank of India (SBI) to refund ₹99,940 to a customer who lost the money through five unauthorised UPI transactions in July 2021. In its order dated October 21, 2026, the commission dismissed SBI’s appeal and directed the bank to pay the amount with interest at 9% per annum from July 21, 2021, along with ₹10,000 towards compensation and litigation expenses. The total payout is estimated to exceed ₹1.5 lakh, although the final interest amount has not been calculated.

The case dates back to July 20, 2021, when a delivery agent allegedly visited the customer’s residence to collect a wrongly delivered parcel. According to the customer, the agent asked for bank details to process a refund. The customer said that he refused to share his UPI PIN or other confidential banking information. However, the following afternoon, five unauthorised transactions were carried out from his bank account.

On July 21, 2021, at around 2:50 pm, the customer received alerts about five withdrawals of ₹25,060, ₹25,060, ₹25,060, ₹24,560 and ₹200. The total amount withdrawn was ₹99,940. He denied authorising the transactions and stated that he had neither shared his UPI PIN nor disclosed any one-time password (OTP).

The customer said that he immediately blocked his account and mobile number, informed SBI about the fraudulent transactions within two hours and lodged a complaint with the Chandigarh Police and Cyber Cell. He also submitted a written complaint to the bank on July 22, 2021, seeking a refund of the amount. According to him, the bank had assured him that the money would be refunded within 15 days after approval from its head office. However, repeated visits to the bank and a reminder sent on February 9, 2022, did not resolve the matter.

SBI admitted that ₹99,940 had been debited from the customer’s account through five UPI transactions. However, the bank argued that UPI payments required a customer-generated six-digit PIN and could not be completed merely through an OTP. It contended that the customer had either carried out the transactions himself, shared his UPI PIN or failed to keep it confidential. The bank denied any deficiency in service and challenged the district consumer commission’s order.

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The district consumer commission had directed SBI to refund ₹99,940 with interest at 9% per annum from July 21, 2021. It had also ordered the bank to pay ₹10,000 towards compensation for harassment, mental agony and litigation expenses. SBI subsequently filed an appeal challenging this decision.

While examining the appeal, the state commission also considered whether it had been filed within the prescribed limitation period. The bank had appealed on May 25, but there was no proof that the free copy of the district commission’s order, reportedly sent in December 2025, had been delivered. The commission therefore calculated the limitation period from April 15, when SBI received the paid copy, and treated the appeal as timely.

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On October 21, 2026, the state commission dismissed SBI’s appeal and found no reason to interfere with the district commission’s order. The commission observed that a bank cannot escape responsibility merely by alleging that a customer shared a UPI PIN or failed to keep it secure when sufficient evidence establishing the customer’s liability is not available.

The commission also referred to the Reserve Bank of India’s guidelines on customer liability in unauthorised electronic banking transactions. These guidelines provide zero liability in specified circumstances, including certain third-party breaches reported within three working days of the bank’s communication about the transaction. The commission emphasised that the burden of proving customer liability in an unauthorised electronic banking transaction rests with the bank.

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During the appeal, SBI had deposited ₹1,54,200. The state commission directed that this amount be transferred to the district consumer commission for disbursement in accordance with the original order. The final amount payable, including interest, has not been quantified in the order, but the estimated payout exceeds ₹1.5 lakh.

The ruling highlights the importance of banks examining unauthorised electronic transactions and establishing customer liability with sufficient evidence before denying a refund. It also underlines the need for customers to report suspicious transactions promptly and preserve records of their complaints.

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Customers should never share their UPI PIN, OTP or banking credentials with anyone claiming to process a refund. If an unauthorised transaction occurs, they should immediately inform their bank, block the affected payment facility and report the incident to the cybercrime authorities.

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