In a clear case of insider hand, Dr Jayaprakash Narayan, a former officer from the Indian Administrative Services (IAS) and founder of Lok Satta Party, lost Rs13.58 lakh during the second COVID lock-down when his mobile subscriber identity module (SIM) card was allegedly swapped. For the past three months, Dr Narayan has been running from pillar to post to recover his money siphoned off from his account in the State Bank of India (SBI) through 101 illegal transfers, mostly via unified payment interface (UPI).
Last month, the Hyderabad police traced some beneficiaries and had recovered Rs2,18,600 that were illegally transferred. To recover the balance Rs11.50 lakh, the former IAS officer has now approached the banking ombudsman of Reserve Bank of India (RBI).
There are two things that clearly show insider hand in this fraud. First, Dr Narayan is an old-school customer and never used mobile banking app or internet banking. For each payment or money transfer, he uses a signed cheque. Secondly, he says his mobile SIM was swapped and then the fraudsters downloaded an app, obtained a UPI customer ID for Dr Narayan and transferred money from his account without his knowledge or consent.
All this took place when there was strict lock-down during the second wave of COVID-19. This incident took place over 21 days in May this year. Dr Narayan came to know about this fraud only on 31 May 2021, when he presented some cheques for withdrawing money. The bank official told him that most of his account was depleted. He immediately filed a complaint with the SBI branch as well as the Hyderabad police.
In his complaint to the banking ombudsman, he says, "In all my account history, there were never multiple transfers of money on successive days. In this case, there were 101 illegal and unauthorised transfers in just 21 days. These transfers were made all over the country. This was completely out of character, and is totally deviant of past history. The account is held by an individual, not a company. In my account, there were probably never that many transfers in any year, let alone in a month. And on several days Re1 was transferred first, presumably to test as a trial balloon, and it was followed by several transfers of large sums on the same day. There were as many as 22 such transfers of Re1 on each occasion. This is anomalous and the culprits were obviously testing waters. Despite these obvious anomalies, no red flags were raised in the bank's system, and my interests were not protected."
"There was no possibility of my complaining to the bank until 31 May 2021. My phone was hacked or SIM was taken possession of without my knowledge by the culprits. Despite my repeated efforts, the mobile phone service provider did not rectify the phone or detect illegal use of the SIM card or invalidate the SIM card. If the bank sent any messages regarding the withdrawals, they went to the criminals, who perpetrated the crimes. I had no knowledge whatsoever of the transfers from my account," the former IAS officer says.
Dr Narayan says, he has never shared his account details with any person and, since there was no electronic payment authorised by him and no payment app was downloaded or ever used by him, sharing of his payment credentials with anyone does not even arise.
"Technology is meant to protect the customers and facilitate easy transactions. If the depositor's money disappears without consent or authorisation, and for no fault of the depositor, and the depositor has to bear the loss, then the trust in our banking system will collapse," he says, adding, "The bank holds the customer's money as a trust. The bank has a fiduciary responsibility to safeguard the depositor's money. Out whole financial and banking system rests on this public trust and faith in the fiduciary responsibility of the banks. If there are any systematic deficiencies that cause loss of depositors' money, the depositors must be protected at all costs. The banking system must find answers, which will protect the honest and innocent customers at all times."
As reported by Moneylife, earlier this month, the Gondia District Consumer Disputes Redressal Commission directed the SBI to reverse the disputed transactions worth Rs18.36 lakh into the customer's bank account.
Coming down heavily on SBI, the district commission, stated, "... it is a burden on the part of the bank and its employees to discharge their burden first then only can the complainant be held responsible for any alleged negligence. Hence looking from any angle, the opposite parties miserably failed to discharge their burden that the complainant was negligent." (Read: Reverse Disputed Transaction of Rs18.36 Lakh, Consumer Commission Tells SBI
As per the RBI master circular on customer services in India dated 1 July 2015, point (iv) mandates that banks may put in place a mechanism for velocity check on the number of transactions effected per day or per beneficiary and any suspicious operations should be subjected to alert within the bank and to the customer.
SIM Swap Fraud
This is a very serious type of fraud. In this, the fraudsters obtain a new SIM by submitting your documents to a mobile operator. The fraudster can call you pretending to be a representative from your mobile operator and ask you to forward an SMS to upgrade your network. For this, the caller asks the subscriber to send SMS with a 20-digit number written on the back of the existing SIM. After receiving this SMS, the mobile service-provider deactivates existing SIM and activates a duplicate or new SIM. While you will blame the mobile company for no network signal on your mobile phone, the fraudsters will use the new SIM to receive SMS OTPs from your bank.