The Supreme Court ruled that banks, specifically State Bank of India (SBI), are accountable for unauthorized transactions. This decision followed a fraudulent case where a customer lost Rs 94,204.80 after being deceived by a fraudster. The court emphasized banks must utilize advanced technology for safety and advised customers not to share sensitive information.
New Delhi: The Supreme Court recently delivered a sjudgment that banks are responsible for protecting their customers from unauthorized transactions. The ruling came in response to a petition filed against the State Bank of India (SBI) after a fraudulent transaction of Rs 94,204.80 was reported from a customer’s account. While the court emphasized that banks must use the best technology to ensure customer safety, it also advised account holders to be cautious and never share sensitive information like OTPs (One-Time Passwords) with third parties.
The case came to light when the customer attempted to return goods purchased through online shopping. The customer received a call from a fraudster posing as a representative of the retailer’s customer care. The fraudster convinced the customer to download a mobile app, and subsequently, unauthorized transactions were made from the customer’s account. The customer insisted they had never shared their OTP or M-PIN, but SBI denied responsibility, claiming the transactions were authorized by the customer.
In the case, the Guwahati High Court had earlier ruled that SBI should refund the full amount, citing a Reserve Bank of India (RBI) circular from July 6, 2017. The circular states that if an unauthorized transaction occurs due to third-party data theft and the customer reports it immediately, the customer cannot be blamed for negligence.
SBI challenged the decision in the Supreme Court, but the Court upheld the High Court’s ruling. It reaffirmed that banks must be vigilant and adopt the best available technology to prevent such incidents. The court also noted that the customer had informed the bank within 24 hours of the fraud, and the bank was therefore liable for the loss.
The Supreme Court further cautioned customers, advising them not to share their OTPs or passwords under any circumstances to prevent falling victim to fraud.
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