HDFC Bank held responsible for illegal fund transfer

Consumer forum orders bank to compensate customer, says it did not follow RBI guidelines on online fund transfers

In a significant ruling, the District Consumer Complaints Redressal Forum has held HDFC Bank responsible for unauthorised fund transfer in an Internet banking transaction, reports PTI.

In an order dated 25th March, the Forum directed the Bank to pay a customer the whole amount which had been transferred from his HDFC Bank account without his authorisation. The Forum, headed by MG Rahatgaokar, held that the Bank had failed to implement the guidelines issued by the Reserve Bank of India (RBI), for Net banking facility.

Nikhil Phutane, the complainant, has an account with HDFC's Santa Cruz (a Mumbai suburb) branch. Qatar National Bank, where he works, transferred Rs4,60,000 to his account in October 2008. However, Mr Phutane found out in November that his bank balance was zero.

The entire amount had been transferred—through net banking—to the account of a person called Dinesh Shukla, at Lucknow. According to Mr Phutane, he never authorised HDFC Bank to add Mr Shukla's name to the list of "third party beneficiaries" on his online account.

A police complaint was lodged, and Mr Shukla and four others, including two Nigerian nationals, were arrested, and Rs70,500 was recovered from them.

Mr Phutane demanded that the Bank return him the rest of the amount, as he was not at fault.

Since HDFC Bank refused to pay him the balance amount, he filed a complaint before the Forum. The Bank argued before the Forum that either Mr Phutane had inadvertently revealed his transaction password to someone, or the computer used by him had a virus.

It also argued that after the request for fund transfer was received from his online account, an SMS was transmitted and an email was sent to Mr Phutane, for confirming the request. Since no reply came (from Mr Phutane), the funds were transferred.

But the Forum held that Bank failed to prove that such an alert had been sent. Further, it held that simply because Mr Phutane failed to respond to the mail, the Bank should not have proceeded with the transfer.

The Bank had failed to implement the "National Electronic Fund Transfer (NEFT) guidelines, issued by the RBI," the Forum held, asking it to pay Mr Phutane the balance amount. In addition, the Forum also asked the Bank to pay Rs35,000 to him, on account of "mental agony" faced by Mr Phutane, and legal expenses.

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    Rupesh Kumar Singh

    1 decade ago


    Some unauthorized transaction has been done from my saving account and regarding the same i have logged the complain at customer care.
    complaint no are 69274 , 71726 , Del1228774. 4-5 wrong payment are done at IDEA Cellular.

    Till the date i have not received any resolution for the same as from customer care i have informed that in 2 weeks money will be refunded in my account but it's Appx 2 months,
    I am still waiting but this is the limit of my patience. i am unable to understate what kind of service HDFC is providing. 2 month back pending issue is not resolved. No reply for the same.

    Please clarify if you can not resolve the issue and deposit my amount please give me in written, so that i will move to next level like consumer court.

    K B Patil

    1 decade ago

    Currently, ICICI Bank is showing an ad on TV where the bank employees are seen pampering customers to any extent. In one ad, an elderly lady enters the bank to credit a cheque sent by her son from USA. The lady is chatty and the bank's employee is shown to be extremely indulgent and patient even when all the others have left. I think a poll should be taken as to how many customers of that bank share this exaggerated opinion. All the new private banks share a common ancestry with Shylock, the mechant of Venice.

    In my experience, the service orientation of these banks is quite poor. Any deficiency on their part is denied straightaway. For instance, weekly SMS alerts on the balance held. Sometimes I have not received this SMS and when I point this out to the bank, they plainly say that the SMS was sent and that I have to check with my service provider.

    Narendra Doshi

    1 decade ago

    Bank should do due checks BEFORE concluding that the client is on the wrong.
    Branch officials seem NOT to use their powers for satisfactorily solving the issues but ONLY want to show the rules.
    What checks/systems are there by the Bank's main/head office to be AWARE of such instances occuring , may be quite frequently, at the branch level?

    m k sujitkumar

    1 decade ago

    i hope that the above decision will help the consumer community & BRING some sense to the arrogant officials of such banks.
    such banks should be made to give copies of rules every year to the customer

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