Holding that the Bank committed 'deficiency in service' by refusing to accept demonetised currency notes for deposit during the limited period allowed after the 2016 demonetisation announcement, the national consumer disputes redressal commission (NCDRC) has directed Axis Bank to pay ₹3.19 crore to Procure Logistics Services Pvt Ltd, a Delhi-based company.
In
an order last week, the NCDRC bench of air vice-marshal (AVM) J Rajendra (retd) and justice Anoop Kumar Mendiratta says, "The denial of access to the only lawful window for deposit, without recourse to the statutory reporting and investigative mechanism, amount to an arbitrary substitution of the regulatory framework and is antithetical to the very object and scheme of demonetisation, which was intended to bring the currency into the formal banking system and necessary scrutiny. Axis Bank clearly failed by repeatedly disallowing Procure Logistics Services, the complainant, to deposit the notified cash into its own know-your-customer (KYC) compliant account, despite multiple requests and persisted with this till the entire timeline lapses. This clearly constitutes 'deficiency in service' as defined under Section 2(1)(g) of the Consumer Protection Act, 1986."
"This is independent of the legality or otherwise of the regulatory framework governing the demonetisation processes. Acceptance of deposits in a duly maintained account is undisputedly the core banking service, and the banker and account holder relationship obligates the bank to act reasonably and in accordance with law. If any transaction, which is otherwise permitted, is to be refused, the same shall be based on cogent reasons duly communicated and supported by applicable regulatory norms. Therefore, in the given circumstances, even if there was some ambiguity in the matter or suspicion about the cash held, Axis Bank ought to have allowed the complainant to deposit the same in the KYC verified Account and proceeded further with respect to such cash deposited as per law," NCDRC says.
The dispute traces back to the demonetisation decision announced on 8 November 2016, when specified bank notes of ₹500 and ₹1,000 ceased to be legal tender but were allowed to be deposited in bank accounts within a specified window.
According to the complaint, Procure Logistics Services had attempted to deposit demonetised currency in its Axis Bank account during this period. However, the Bank allegedly refused to accept the deposit, despite repeated requests.
NCDRC observed that the Bank had persisted in declining the deposit requests until the permitted timeline for depositing the old notes expired.
“The bank clearly failed by repeatedly disallowing the complainant to deposit the notified cash into its own KYC-compliant account, despite multiple requests and persisted with this till the entire timeline lapses,” the commission noted in its order.
The commission emphasised that the statutory framework governing demonetisation did not authorise banks to unilaterally reject deposits made within the permitted period.
It held that if a bank found any transaction suspicious, the proper course would have been to accept the deposit and subsequently report the matter to the relevant authorities.
“If the transactions appeared suspicious, the bank was required to monitor and report them to the competent authorities. The statutory framework did not empower the bank to unilaterally refuse acceptance of deposits in a KYC-compliant account during the permitted window,” the commission stated.
The commission further observed that the outright denial of the deposit effectively deprived the company of its only lawful chance to exchange or deposit the demonetised currency.
Because the deposit was refused, the specified banknotes held by the company became worthless, once the government deadline expired.
NCDRC says this resulted in a direct and irreversible financial loss to the company.
The commission held that the Bank’s conduct clearly amounted to 'deficiency in service' under Section 2(1)(g) of the Consumer Protection Act, 1986.
After examining the facts and legal framework, the commission ordered Axis Bank to compensate the company for the loss suffered due to the refusal.
NCDRC directed Axis Bank to pay ₹3.19 crore along with simple interest at 6% per year from 30 December 2016 until the date of payment.
The commission further ordered that the amount must be paid within two months. If the payment is delayed beyond that period, the Bank will be liable to pay interest at 9% per year for the delayed period.
By holding Axis Bank liable for refusing deposits, NCDRC clarified that banks cannot arbitrarily deny lawful transactions in KYC-compliant accounts and must follow regulatory procedures rather than unilaterally blocking deposits.
(Consumer Complaint No2755 of 2018 Date: 10 March 2026)
