Bank ordered to reimburse Rs. 1 lakh that was lost due to unauthorized ATM transactions

                                 

After money was taken out of a Chandigarh resident's savings account through unauthorized transactions, the district consumer complaints redressal panel in Chandigarh ordered Allahabad Bank (now Indian Bank) to reimburse Rs.1,00,078.Nine transactions were of Rs.9,999 each and one was of Rs.10,087, making a total of Rs.1,00,078.49.

According to the case details, On November 17, 2025, the order was given in response to a complaint made by Hallomajra resident Namrata Naman Jha. She said that on July 29, 2020, ten unlawful transactions were made using her ATM card.

Jha notified the bank and the cybercrime cell that same day and blocked her ATM card right away. She also complained to the bank online. On August 4, 2020, the bank responded, stating that they had granted a shadow credit and need a copy of a FIR in order to take additional action.

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 Rs.1,00,078 to Jha with 9% annual interest from July 29, 2020, until payment. The bank was also ordered to pay Rs.10,000 as compensation for harassment and litigation costs.

Zero Liability of a Customer

A customer’s entitlement to zero liability shall arise where the unauthorised transaction occurs in the following events:

1. Contributory fraud/ negligence/ deficiency on the part of the bank (irrespective of whether or not the transaction is reported by the customer).
2. 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:

1. 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.
2. 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.