The High Court of Karnataka has requested banks to strive hard to make their digital banking systems “robust, foolproof, and resistant to misuse by fraudsters”

“The money involved in the banking sector is the public money, and banks are accountable to the public. Any failure would not only affect the particular customer of the bank, but also the entire economy of the country, and the trust of the people in the banks,” the court observed.

A Division Bench comprising Justice D.K. Singh and Justice T.M. Nadaf passed the order while upholding the orders of the State and National Consumer Disputes Redressal Commissions, which had directed the State Bank of India to re-credit ₹1.99 lakh to the account of its customer, Pradosh Kumar Benerjee of Bengaluru, after the amount was debited from his account through a fraudulent link.

The septuagenarian customer, who attempted to pay his electricity bill using a link, subsequently found that ₹1.99 lakh and ₹25,000 had been debited from his account in separate transactions. He immediately sent an email to the bank and lodged a complaint with the cybercrime police. While the bank re-credited ₹25,000, it did not respond to his plea for re-credit of the remaining amount.

A district consumer forum in 2022 had dismissed Mr. Benerjee’s complaint alleging deficiency in service, accepting the bank’s claim that he was not entitled to the Reserve Bank of India’s ‘zero liability of customer’ norms as he had allegedly lodged the complaint after a delay of eight days.

However, the Karnataka State Consumer Disputes Redressal Commission allowed his appeal and directed the bank to re-credit the amount to his account. As the National Commission had dismissed the bank’s appeal against the State Commission’s order, the bank had approached the High Court.

Both the State and the National Commissions held that the customer had shared his one-time password only to make a ₹20 payment through a link, not for the subsequent unauthorised transactions. The National Commission also found that he had informed the bank within the prescribed period and was therefore entitled to the “zero liability” benefit.

The Bench agreed with the commissions' findings that the bank was liable to make good the amount that was unauthorisedly debited, as there was an intimation to the bank within the time provided as per the RBI’s norms.