Cyber fraud without OTP on customer’s mobile – Bank’s liability
The Petitioner No.1 has bank account in the Bank of Baroda for the petitioner No.2 Company for last 15 to 20 years.
On 1.10.2022, certain entities / individuals were added as beneficiaries to the said account without OTP being sent to the petitioners on their registered mobile number / email.
On 2.10.2022, the accountant of the petitioner no.2 informed that he had received several messages from the Bank for debit of total amount of Rs.76,90,017/- in several tranches from the said account without the request of the petitioners for such transfers.
Immediately this was informed to the Cyber Cell of Worli Police Station and the Bank Manager to block sim card of registered mobile number associated with the bank account.
On 3.10.2022, the petitioner gave letter to the Bank and details of 20 transactions to several unknown individuals.
There was exchange of correspondence including complaint to the Bank Ombudsman (Respondent No.1) for refund of the said amount covered by the cyber fraud.
HELD that the Circular dated 6.7.2017 of RBI provides for zero liability of a customer in respect of unauthorised electronic banking transactions on account of contributory fraud / negligence / deficiency of the Bank. Para 6(ii) is important and it speaks about 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 unauthorised transaction. Moreover, Para 12 of the Circular keeps the burden of proving costumer liability in case of unauthorised electronic bank transaction on the bank. The Consumer Protection Policy of the Bank also provides for the same salutary provisions.
As per RBI Circular and Customer Protection Policy of the Bank, a customer has zero liability for unauthorised transactions of a third party breach and the deficiency lies in the system and the customer notifies the same to the Bank.
Judgment dated 13.6.2024 in Writ Petition No.1150 of 2023 of Jaiprakash Kulkarni & another Vs. The Banking Ombudsman and others
