Court orders UCO Bank to pay compensation for not closing FD of customer

The District Consumer Dispute Redressal Commission-III, South Kolkata (West Bengal) bench recently ruled against UCO Bank for deficiency in service. The bank was found liable for its failure to utilize the Core Banking Solution (CBS) facility to credit the matured fixed deposit amount in the complainant’s savings account. As a result, the bank has been directed to transfer the matured amount with interest and pay Rs. 20,000/- as compensation.

Background of the Case

The complainants were customers of UCO Bank and held a fixed deposit account that matured on November 7, 2021, with a value of Rs. 7,337/-. Upon maturity, they requested the branch manager to credit the matured amount to their savings account, for which they had previously submitted KYC documents. However, the branch manager refused to credit the amount, citing a mismatch between the KYC details of the fixed deposit account and the savings account.

The complainants made verbal communications and visits to the bank’s zonal office but did not receive a satisfactory response. Consequently, they approached the District Consumer Dispute Redressal Commission-III, South Kolkata, and filed a consumer complaint against the bank.

Bank’s Response and Commission’s Decision

In response to the complaint, UCO Bank denied all allegations and claimed that it had repeatedly requested the complainants for KYC documents to facilitate the transfer of the matured fixed deposit amount. However, the bank did not provide any supporting documents or evidence to substantiate its claims.

The District Commission acknowledged the importance of Core Banking Solution (CBS) in modern banking, which allows customers to avail themselves of services from any branch within the CBS network. It also emphasized the need for periodic KYC updation to maintain accurate customer records, as per Reserve Bank of India (RBI) guidelines.

While the District Commission recognized the validity of the bank’s stance regarding the KYC mismatch between accounts, it held that the bank failed to effectively utilize the provisions of CBS to address the issue. Despite the availability of CBS, the bank neglected to resolve the matter efficiently. Therefore, the District Commission held the bank liable for deficiency in services.

Commission’s Ruling

As a result of the ruling, the District Commission directed UCO Bank to transfer the matured fixed deposit amount with interest, adhering to RBI guidelines and completing re-KYC formalities at the branch where the fixed deposit originated. Additionally, the bank was ordered to pay a compensation of Rs. 20,000/- to the complainants for mental agony, harassment, and litigation costs.