Chandigarh Consumer Commission Holds SBI Liable For Failing To Address Unauthorized UPI Withdrawals

Brief Facts of the Case:

The complainant, Sanjeev Kumar Sharma, maintained a savings bank account with the State Bank of India( O.P 1), High Court Branch. On 21.07.2021, at around 2:50 PM, he received alerts regarding five unauthorized UPI transactions—₹25,060, ₹25,060, ₹25,060, ₹24,560, and ₹200—totalling ₹99,940 debited from his account.

Upon noticing the fraudulent debits, the complainant immediately blocked his bank account and mobile number and reported the matter the same day to the Cyber Crime Investigation Cell, Chandigarh Police. He subsequently submitted a written complaint dated 22.07.2021 to SBI seeking reversal of the unauthorized debits, and also lodged a complaint with the Reserve Bank of India ( O.P 2).

The RBI, vide letter dated 09.12.2021, informed him that his grievance had been registered and would be examined for maintainability. SBI had initially assured him that his request was being processed and that the amount would be refunded within 15 days after head-office approval. However, despite multiple follow-ups and a reminder dated 09.02.2022, no action was taken and no refund was provided.

Aggrieved by the bank's failure to redress his grievance, the complainant filed the present consumer complaint seeking refund of ₹99,940, compensation of ₹1,00,000 for mental agony and harassment, and other appropriate reliefs.

Contentions of the Complaint:

The complainant argued that the unauthorized UPI withdrawals from his bank account occurred without any negligence on his part, as he had not shared his PIN, OTP, or any confidential banking information with anyone. He contended that he immediately reported the fraudulent transactions to the Cyber Crime Cell and the bank within the prescribed time and repeatedly followed up, yet the bank failed to reverse the debits or provide any relief. He maintained that SBI was obligated to safeguard customer funds and comply with RBI's guidelines on limiting customer liability in unauthorized electronic transactions. According to him, the bank's failure to act promptly and responsibly amounted to clear deficiency in service and unfair trade practice, causing him financial loss, mental harassment, and inconvenience.

Contentions of SBI:

SBI submitted that all five disputed transactions were carried out through the UPI mode, where no OTP is required and payments can only be authorized by entering the customer's secret UPI PIN. The bank contended that the complainant himself must have executed the transactions, shared his UPI PIN with someone else, or failed to maintain its confidentiality. According to SBI, since the transactions were authenticated using the customer's PIN and linked mobile number, the bank bore no responsibility and could not reverse the amounts. The bank therefore denied any deficiency in service and prayed for dismissal of the complaint. The complaint against the Reserve Bank of India (OP No. 2) was dismissed as withdrawn.

Observations and Decision of the Commission:

The Commission noted that the complainant had promptly reported the unauthorized transactions to the Cyber Crime Cell and to the bank, which was not disputed by SBI. It further observed that as per the RBI Circular on Customer Protection and Limiting Liability in Unauthorized Electronic Banking Transactions, once a customer reports an unauthorized transaction within the stipulated time, the burden of proving customer liability lies on the bank. SBI, however, failed to produce any evidence to show that the complainant had shared his UPI PIN or had authorized the disputed transactions.

The Commission held that SBI did not comply with the mandatory RBI guidelines requiring the bank to credit the disputed amount within ten working days of notification and to complete its investigation within ninety days. By failing to reverse the unauthorized debits or properly address the complainant's grievance, SBI was found to have committed deficiency in service.

Consequently, the Commission partly allowed the complaint and directed SBI to:

1. Refund ₹99,940 to the complainant along with interest at 9% per annum from the date of unauthorized deduction (21.07.2021) until actual realization.
2. Pay ₹10,000 as compensation for mental harassment and litigation expenses.

SBI was ordered to comply within 45 days from receipt of the certified copy of the order.

Case Title: SANJEEV KUMAR SHARMA Vs. SBI And Others

Case No.: DC/AB1/44/CC/359/2023

Click Here To Read/Download The Order