#bank liability

[jposwal]

OTP Scam Explained: Can Victims Get Money Back Legally in India?

You receive an urgent call. The caller claims to be from your bank, mobile carrier, or a government department. They sound confident. They know your name. They alert you to account blockage, suspicious activity, or failed transactions. Then comes the fatal moment. You share an OTP. Within minutes, money disappears from your account. No warning. No confirmation. Just panic. OTP scams have…

OTP Scam Explained: Can Victims Get Money Back Legally in India?

[seemabhatnagar]

"Bank Liability in Fraudulent Transactions: Supreme Court Upholds Customer Protection Under RBI Guidelines"

                      Image Courtesy TheDigitalArtist

➡️ The petitioner, State Bank of India (SBI), challenged the Gauhati High Court's decision regarding fraudulent online transactions conducted on the account of the respondent (Pallabh Bhowmick-Account Holder). The Gauhati High Court held the bank liable, finding no negligence on the part of the respondent.

#FraudulentTransactions #BankLiability #RBICircular2017

➡️ The primary issue in this *Case was whether the State Bank of India can be held liable for the loss caused by unauthorized and fraudulent online transactions, considering RBI’s Circular dt.06.07.2017 and the absence of negligence by the account holder.

#CustomerProtection #UnauthorizedTransactions

➡️The Counsel for the Petitioner SBI argued that it should not be held liable for the fraudulent transactions, claiming that the customer should bear some responsibility for securing their account and transactions.

➡️ The Counsel for the Respondent Account Holder contended that the transactions were unauthorized and fraudulent, and no negligence could be attributed to them. They promptly reported the fraudulent activity within 24 hours, fulfilling their obligation under RBI guidelines.

#OnlineBankingSecurity #Negligence #StateBankofIndia

➡️ The Apex Court observed that

🔹The transactions on the respondent’s account were unauthorized and fraudulent.

🔹The bank was unable to establish any negligence on the part of the respondent.

🔹RBI Circular clauses 8 and 9 (dt. 06.07.2017) clarified the bank's liability in such cases.

🔹Banks have access to advanced technology and should remain vigilant to prevent unauthorized transactions.

🔹Customers must also exercise caution and avoid sharing OTPs with third parties.

🔹The bank has a duty to ensure the security of its systems and detect unauthorized transactions.

🔹The respondent reported the fraud within the stipulated time under RBI guidelines, absolving them of liability.

#LegalPrecedent #SupremeCourt #SLPCivil

➡️ The Supreme Court dismissed the Special Leave Petition filed by SBI, upholding the Gauhati High Court's decision as the onus is on the banks to address such fraudulent activities unless negligence on the part of the customer is proven.

*Case SBI v. Pallabh Bhowmick & Ors.

SLP(C) 30677/2024, Before the Supreme Court of India

Heard by Hon'ble Mr. Justice J B Pardiwala & Hon'ble Mr. Justice R Mahadevan J

🔸By Seema Bhatnagar