Indian Bank ordered to Refund Rs.1 Lakh Lost in Unauthorized ATM Transactions
The district consumer disputes redressal commission in Chandigarh has ordered Allahabad Bank (now Indian Bank) to refund ₹1,00,078 to a Chandigarh resident after money was withdrawn from her savings account through unauthorized transactions.
The order was issued on November 17, 2025, in a complaint filed by Namrata Naman Jha, a resident of Hallomajra. She said that her ATM card was misused and 10 unauthorized transactions took place on July 29, 2020. Nine transactions were of ₹9,999 each and one was of ₹10,087, making a total of ₹1,00,078.49.
According to the case details, Jha immediately blocked her ATM card and informed both the bank and the cyber crime cell on the same day. She also filed an online complaint with the bank. The bank replied on August 4, 2020, saying that they had given a shadow credit and needed a copy of an FIR for further action.
Jha approached the consumer commission after claiming that the bank did not take further steps or return her money. The bank argued that she shared her OTP with fraudsters and installed an app as instructed by unknown callers, which led to the unauthorized transfers. The bank said the loss happened because of the customer’s negligence and that it was not responsible.
However, the commission said the bank failed to provide proof that the customer was at fault. It referred to the Reserve Bank of India’s July 2017 circular on unauthorized electronic transactions. The circular says that banks must prove customer liability in such cases and that customers have zero liability if the fraud is due to a third-party breach and is reported within three working days.
The commission noted that Jha reported the fraud immediately to both the bank and the cyber crime cell. It also said the bank failed to resolve the complaint within the required 90 days as per RBI rules. The commission stated that the bank did not follow RBI guidelines and did not address the complaint on time, which amounted to deficiency in service. It directed the bank to refund ₹1,00,078 to Jha with 9% annual interest from July 29, 2020, until payment. The bank was also ordered to pay ₹10,000 as compensation for harassment and litigation costs.
Limited Liability of a Customer
Zero Liability of a Customer
A customer’s entitlement to zero liability shall arise where the unauthorised transaction occurs in the following events:
- Contributory fraud/ negligence/ deficiency on the part of the bank (irrespective of whether or not the transaction is reported by the customer).
- Third party breach where the deficiency lies neither with the bank nor with the customer but lies elsewhere in the system, and the customer notifies the bank within three working days of receiving the communication from the bank regarding the unauthorised transaction.
Limited Liability of a Customer
A customer shall be liable for the loss occurring due to unauthorised transactions in the following cases:
- In cases where the loss is due to negligence by a customer, such as where he has shared the payment credentials, the customer will bear the entire loss until he reports the unauthorised transaction to the bank. Any loss occurring after the reporting of the unauthorised transaction shall be borne by the bank.
- In cases where the responsibility for the unauthorised electronic banking transaction lies neither with the bank nor with the customer, but lies elsewhere in the system and when there is a delay (of four to seven working days after receiving the communication from the bank) on the part of the customer in notifying the bank of such a transaction, the per transaction liability of the customer shall be limited to the transaction value or the amount mentioned in Table below, whichever is lower.
| Maximum Liability of a Customer | |
| Type of Account | Maximum liability (₹) |
| • BSBD Accounts | 5,000 |
| • All other SB accounts • Pre-paid Payment Instruments and Gift Cards • Current/ Cash Credit/ Overdraft Accounts of MSMEs • Current Accounts/ Cash Credit/ Overdraft Accounts of Individuals with annual average balance (during 365 days preceding the incidence of fraud)/ limit up to Rs.25 lakh • Credit cards with limit up to Rs.5 lakh | 10,000 |
| • All other Current/ Cash Credit/ Overdraft Accounts • Credit cards with limit above Rs.5 lakh | 25,000 |
