SBI ATM fraud: Customer to get full refund with 10% interest from State Bank of India, orders Delhi State Consumer Commission

Time of India

09-07-2025

How did this case start?
What did the Delhi district consumer commission say?
RBI through its notification also clarified that customers should not suffer any loss if unauthorized electronic banking transactions are reported within three working days and also the amount involved is to be credited in the concerned account within 10 days through the concept of "Zero Liability" and "Limited Liability".
Hence allowing the complainant, we direct OP-1 (SBI) to refund the amount of Rs 20,000 to the complainant along with interest @ 10% p.a. from date of fraudulent transaction i.e., 04.01.2014 till realization.
OP-1 (SBI) shall also pay a litigation cost of Rs 5,000 to the complainant along with Rs 10,000 towards compensation for mental agony & harassment suffered by the complainant. Order be complied within 30 days of receipt of order falling which the OP-1 (SBI) shall be liable to pay interest @ 12% p.a. on the refunded amount till realization.
What did the Delhi state consumer commission say?
It is the case of the appellant (SBI) that the respondent (customer) did not place on record the ticket of the journey from Guwahati to Delhi on 04.01.2014 to prove that the transaction was done by him from Guwahati Railway Station.
It is noteworthy that the respondent has placed on record the bank statement of his account. A perusal of the same shows that the transaction of Rs 1,000, Rs.20,000 and Rs 1,000 had taken place at Guwahati Railway Station at ATM Machine No.414, ATM 8024 and ATM 40040 respectively. In these circumstances, we find no force in the contention of the appellant that production of ticket by the appellant was necessary to substantiate the averments made by the respondent.
Further, the appellant (SBI) has placed on record three typed versions of the SMS, which was received by him on his phone. It's noteworthy that these messages cannot be said to be forged and fabricated as no material was placed on record in this regard by appellant (SBI). Further, we find no force in the arguments of the appellant (SBI) that respondent (customer) did not mention a limit for each day withdrawal from his account, and he himself had withdrawn Rs 20,000 from the ATM machine.
It is worth noting that the withdrawal limit has nothing to do with the case as the complaint was filed by the respondent (customer) for wrong debit of Rs 20,000 from his account.
Further, it is also the case of the appellant (SBI) that he could not attend the proceedings before the District Forum as the then Branch Manager of the appellant (SBI) had died and non-appearance of appellant before the District Forum was not intentional. However, the appellant did not place on record the Death Certificate of the then Branch Manager in support of his arguments.
It is worth noting that appellant (SBI) had put appearance before the District Forum on 29.05.2015 and a copy of the complaint was furnished to it and 2 months' time was given to the appellant to file a written statement. However, none had appeared on the next day of hearing, i.e. 24.11.2015.
Thereafter, one more opportunity was granted by Ld. District Forums to the appellant to file written statement. But again, none had appeared on the next day of hearing and no written statement was filed by the appellant.
It is noteworthy that no explanation had been furnished by the appellant as to what prevented counsel for the appellant to appear in the matter and to make submissions regarding the death of the then Branch Manager and to place on record the Death Certificate of the then Manager. It is noteworthy that no death certificate has been placed on record by the appellant before this commission (state) also.
What is the significance of this case's judgement for bank customers?
Mr Panwar fought for over 11 years to prove that State Bank of India (SBI) made a mistake by approving fraudulent ATM withdrawals that led to major financial loss for him. This ATM cash withdrawal fraud occurred at Guwahati Railway Station on January 4, 2014 when his SBI debit card was used to withdraw cash from ATMs three times without his consent. The ATMs involved were No.414, ATM 8024 and ATM 40040. Initially he lodged a complaint with SBI and the RBI Banking ombudsman, later he filed a consumer complaint case with the Delhi consumer commission.On October 25, 2017, the Delhi district consumer commission directed SBI to refund Rs 20,000 to him along with interest @10% per annum, from the date of the fraudulent transaction i.e., January 4, 2014, till realization. The commission also ordered SBI to pay Rs 5,000 for litigation costs and Rs 10,000 as compensation for the mental distress & harassment he experienced.Rather than resolving the case by paying the compensation, SBI chose to appeal this decision at the Delhi State Consumer Commission. On May 7, 2025, the Delhi State Consumer Commission said there was no illegality or material irregularity in the distinct consumer commission's order and said ordered SBI to compensate the bank customer. If SBI decides to pay then it has to give Rs 58,000 (including 10% interest for 11.5 years).Read below to know and understand why this bank customer won the case and the legal grounds for this ruling. The legal analysis applied in this case may help you in a similar situation.Here's the timeline of events according to the order of the Delhi State Consumer Commission dated May 7, 2025:Mr Panwar who had a bank account with SBI, Delhi branch, used his debit card for withdrawing money at the Guwahati Railway Station. At first, he used SBI's ATM machine to withdraw Rs 1,000. However, the transaction was unsuccessful.He then went to a nearby ATM of Indian Overseas Bank at the railway station and successfully withdrew Rs 1,000 and boarded his train for Delhi. Shortly after he boarded, he received three SMS messages from SBI confirming successful ATM cash withdrawals of Rs 1,000, Rs 20,000 and Rs 1,000 using his SBI debit card.On reaching Delhi, he lodged a computerised complaint regarding the fraudulent deduction from his SBI account. Subsequently, his account received a credit of Rs.1,000 but Rs 20,000 wasn't credited to his account.When he enquired about this, he was told that the transaction of Rs 20,000 was successful and so the amount could not be credited to his account.He lodged an online complaint and requested SBI to provide the CCTV footage of the transaction held at the ATM of the Guwahati Railway Station, but his complaint was not acted upon by the bank despite him visiting the bank on February 20, 2014.Thereafter, he lodged a complaint with the RBI Banking Ombudsman, twice, due to misplacement of his earlier complaint. Since, no resolution was forthcoming from any of the opposite parties, he filed the complaint before the District consumer forum, alleging deficiency in service and praying for refund.On October 25, 2017, the Delhi district consumer commission passed the following order:SBI filed an appeal against this order in Delhi State Consumer Commission.The Delhi State Consumer Commission decided to hear this case to answer this question of law: 'The only question for consideration is whether there is any illegality or material irregularity in the order passed by the District Forum.'On May 7, 2025 the Delhi state consumer commission said:'In these circumstances, we are of the considered view that there is no illegality or material irregularity in the impugned order dated 25.10.2017 passed by Ld. District Forum, which requires interference by this Commission. Accordingly, the appeal filed by the appellant is hereby dismissed.'If SBI decides to pay the compensation instead of filing another appeal then the bank has to pay Rs 20,000+ 20,000*10%*11 years 6 months+Rs 5,000+ Rs 10,000= Rs 20,000+ 23,000=Rs 43,000+5000+10,000= Rs 58,000.ET Wealth Online asked various experts about what the significance of this judgement for bank customers might be. Here's what they said:This order indirectly applauds the efficient customer who had taken prompt action in reporting an unauthorised transaction that was reported in the bank account, but never received by the consumer. Hence, swift and prompt reporting of any such occurrences is the key to getting the money recovered through the legal proceedings.A key highlight of this decision is its reliance on the Reserve Bank of India's directives, which stipulate that consumers are entitled to 'Zero Liability' or 'Limited Liability' if unauthorized transactions are reported within three working days.Furthermore, these guidelines mandate that the debited amount must be credited back to the customer's account within 10 days. This judgment emphatically upholds these crucial consumer protection mechanisms, ensuring that banks are held accountable for adhering to these timelines and principles, thus safeguarding consumer finances.The Consumer Commission's firm stance against the defaulting bank, even when they failed to appear or present adequate defence, underscores the robustness of the consumer redressal system. It sends a clear message to all financial institutions that they bear a stringent obligation to prevent fraud and to diligently resolve consumer grievances.This ruling reinforces the idea that banks cannot avoid accountability through procedural delays or unsubstantiated excuses for non-compliance. For consumers, this ruling solidifies their trust in the system, showing that their rights will be protected and that financial institutions need to prioritize security and quick response in an increasingly digital world.'This judgment again highlights the liability of the banks to indemnify the consumers for wrongful debits in cases of ATM withdrawals. This is significant from consumers' viewpoint as it highlights the need for awareness of the transactions and the notifications that they receive from the Banks. It then becomes the duty of the consumer to immediately inform the Bank as and when he/she becomes aware of any such wrongful debit, in order to claim indemnity from the Bank.'In this recent case involving a consumer protection-related issue, the State Bank of India was held liable for failing to provide efficient service to its customer, who claimed that a sum of Rs 20,000 was fraudulently debited by the said bank.The Delhi State Consumer Disputes Redressal Commission (SCDRC), passed an order that strengthens consumer rights in the world of digital banking. It is indeed a relief that this order is pronounced in an era when the country's finance-related atmosphere is majorly in sync with digital transactions, coupled with issues related to unauthorized debits, ATM fraud, phishing, and cyber-financial crimes that are on the rise. The forum's strong restatement of consumer rights offers both a fair redressal and a precedent in a setting where the consumer alone bears the brunt of various technical/digital gaps and procedural inadequacies.The most important point that this order raises is the application of the Reserve Bank of India's notification in terms of 'Zero Liability' frameworks. The forum brought to light the fact that the RBI, through its notification, had clarified that customers should not suffer any loss if unauthorized electronic banking transactions are reported within three working days. Additionally, the amount involved is to be credited in the concerned account within 10 days through the concept of "Zero Liability" and "Limited Liability."In the instant matter, although the complainant had, in time, informed the authorities and also repeatedly made efforts to report the unauthorized deduction of Rs 20,000, the bank failed to provide any adequate grievance redressal platform or technical assistance. The Commission's decision to uphold the refund and compensation along with interest emphasizes the importance of the implementation of the RBI's consumer-centric circulars and clarifies that banks should act proactively in such cases without having to push the consumer to the extent of distress and harassment.