Bank liable if customer loses money due to fraud, says Consumer Court

A Kerala consumer court has ruled that banks are liable to compensate customers for unauthorised withdrawals from their bank accounts, even if the customer has been informed about the withdrawals through SMS notifications.

The court made the ruling in a case filed by Salim PM, who lost ₹1.6 lakh due to fraudulent withdrawals from his SBI bank account. Salim had claimed that he had been informed about the withdrawals through SMS notifications, but the court rejected this argument, stating that customers cannot be expected to read all such SMS alerts.

The court also held that banks have a duty to exercise reasonable care to protect the interests of their customers, and that this includes a duty to take steps to prevent unauthorised withdrawals from customer accounts.

As a result of the court’s ruling, SBI has been ordered to pay Salim ₹85,000 in compensation, in addition to the ₹90,000 that it had already paid after an earlier ruling by the banking ombudsman.

The court’s ruling is a significant victory for consumers and sends a message to banks that they will be held liable for unauthorised withdrawals, even if customers have been informed about them.