PNB Ordered to Pay Rs 99,000 for Failure to Address Fraudulent ATM Transactions, Read Full Case
PNB: A recent ruling by the Uttarakhand State Consumer Commission has held Punjab National Bank (PNB) accountable for inadequate service and failure to protect a customer from fraudulent ATM transactions. The customer, a Haridwar resident, was wronged after Rs 75,000 was withdrawn from their bank account in Ghaziabad without authorization. Despite the customer’s prompt reporting of the fraud, PNB failed to take adequate action, leading to the case being escalated through multiple legal channels, ultimately resulting in a compensation award.
The Incident
In August 2018, the complainant, who had an account at PNB, discovered that Rs 75,000 had been withdrawn from an ATM in Ghaziabad, despite not making the transaction. The customer immediately notified the bank and filed an FIR with the local police in Haridwar. However, the bank’s investigation claimed that the card had not been cloned and suggested that the customer might have withdrawn the money themselves.
PNB further argued that the ATM card could only be used by the cardholder with the correct PIN, implying that the complainant was at fault. Despite the customer’s assertions that they had not shared any personal information, the bank failed to acknowledge the fraud and did not offer an immediate resolution.
Investigation and Findings
The Uttarakhand State Consumer Commission, after a thorough investigation, made the following findings:
- The complainant had Rs 77,214 in their PNB savings account, from which Rs 75,000 was withdrawn between August 21, 2018, and August 26, 2018, through an ATM in Ghaziabad.
- No SMS alerts about these transactions were sent to the complainant, which is a violation of banking regulations.
- Despite the customer’s timely complaint, PNB failed to act within three days to resolve the issue.
- The bank’s own investigation found no evidence of card cloning, but a state police investigation confirmed that the transaction occurred due to card cloning.
- The consumer forum also noted that the bank had not provided any conclusive evidence to prove that the fraudulent withdrawals were made using the complainant’s ATM card.
PNB’s Defense
PNB’s legal team maintained that the customer was responsible for protecting their ATM PIN and that the bank had no liability. They argued that an ATM card can only be used by the cardholder and emphasized that the complainant had not shared any personal information. PNB also claimed to have sent a letter to the customer detailing the results of its internal investigation, although the consumer forum found no evidence that such a letter was actually sent.
Commission’s Ruling
In its final ruling, the Uttarakhand State Consumer Commission rejected PNB’s defense, stating that the customer had not shared any sensitive information and that the fraud likely occurred due to the bank’s insufficient security measures. The Commission found that the bank had failed to meet its obligations to protect the complainant’s account from unauthorized access and transactions.
The Commission ordered PNB to compensate the complainant Rs 75,000, along with simple interest at a rate of 6% from the date the complaint was filed until the full payment was made. The bank was also required to pay Rs 5,000 towards the complainant’s legal costs.
Compensation Breakdown
- Principal Amount: Rs 75,000
- Interest: Rs 24,000 (for 5 years and 4 months at 6% interest)
- Legal Costs: Rs 5,000
- Total Compensation: Rs 99,000
PNB has not yet responded to the Commission’s order, and it remains unclear whether the bank will appeal the decision.
Why PNB Lost the Case
Legal expert Vishal Gehrana explains that PNB was found liable due to its failure to conduct proper due diligence. As a financial institution, the bank has a responsibility to safeguard its customers’ accounts and protect them from fraud. Gehrana highlighted that the bank’s failure to send timely alerts about the fraudulent transactions, as required by the Reserve Bank of India’s guidelines, prevented the complainant from taking quick action. Moreover, the lack of a clear and reliable investigation into the fraud, along with the complainant’s timely reporting to the bank and the police, contributed to the Commission’s decision.
This case underscores the important fiduciary duty banks have towards their customers to ensure their financial security, particularly in cases involving fraud. The ruling serves as a reminder that banks must prioritize their clients’ interests and act promptly to resolve any issues related to unauthorized transactions.
