ICICI Bank directed to pay Rs12.85 lakh to NRI customer

Tamil Nadu’s IT secretary has ruled that the financial institution failed to put in place a foolproof Internet banking system with adequate levels of authentication and validation

In a verdict in the first case filed under the Information Technology (IT) Act in the country, Tamil Nadu IT secretary and adjudicator for the State, PWC Davidar has directed ICICI Bank to pay Rs12.85 lakh as compensation to a non-resident Indian (NRI) customer, who complained he lost money from his account due to phishing in 2007 in Chennai, reports PTI.

The order came on a petition filed by Umashankar Sivasubramaniam who claimed he received an email in September 2007 from ICICI Bank, asking him to reply with his Internet banking username and password, or else his account would become non-existent.

Though he replied, he found Rs6.46 lakh transferred from his account to that of a company, which withdrew Rs4.60 lakh from an ICICI Bank branch in Mumbai and retained the balance in its account.

In his application for adjudication filed under the IT Act to the State IT secretary on June 26, 2008, he held the bank responsible for the loss.

Mr Davidar, in his order, directed ICICI Bank to pay Rs12.85 lakh to Mr Sivasubramaniam, saying that the bank has been found guilty.

He said that there was no way by which customers could identify an email as being from a respondent bank (in this case, ICICI Bank). The Bank could have obtained a digital signature from the officer responsible for communicating with customers, thereby providing a layer in authentication of such mails.

There appeared to be no effort of that nature by ICICI Bank, Mr Davidar said, adding that access to the petitioner’s account details “reflects very poorly on ICICI’s systems and procedures in the event of a customer facing this situation.”

“ICICI (Bank) has appeared to function in a manner that would indicate it has washed its hands of the customer. The Bank seems not to have taken RBI’s directives seriously,” he said.

ICICI Bank has failed to establish that due diligence was exercised to prevent contravention of the nature of unauthorised access, Mr Davidar said, adding, “I find the petitioner justified in the instant case.”

“The Bank failed to put in place a foolproof Internet banking system with adequate levels of authentication and validation,” he added.

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    1 decade ago

    Please see the copy of the judgement at http://www.naavi.org along with other related info.

    Shadi Katyal

    1 decade ago

    What a shame that one cannot trust even the bank. Did it not happen before in a call center whee a worker stole funds by a stolen credit card.What kind of persons we hiring and where are the ethics.
    Banks should be held responsible with some fines if such practices persist.

    Adani Power project in MP may hit green roadblock

    The company wanted to tap water from an adjacent tiger reserve for its proposed 1,320MW coal-based thermal power plant

    In fresh trouble for Adani Power (APL), environment minister Jairam Ramesh has indicated that his ministry would not approve the company's proposal for drawing water from the Pench tiger reserve for its project in Madhya Pradesh.

    “Though the company (APL) is yet to approach us for environment clearance, we are clear that we will not allow diversion of water from the protected areas for any commercial use,” Mr Ramesh said on the sidelines of a function, reports PTI.

    He, however, said that the matter would be decided only when it comes for consideration at the meeting of the National Board of Wildlife, a body under the environment ministry which gives the ‘green’ nod to projects.

    The project pertains to the 1320-MW coal-based thermal power plant proposed by APL, in proximity to the Pench tiger reserve in Chhindawara district, Madhya Pradesh.

    Mr Ramesh said that the ministry had last year rejected a similar case proposed by Ambuja Cement, which wanted to tap water from the Majthal Wildlife Sanctuary in Himachal Pradesh for the expansion of its plant.

    Rejecting the proposal, the ministry had pointed that using water from sanctuaries for commercial purposes amounts to violation of Section 29 of the Wildlife (Protection) Act, 1972.

    This is not the first time that an Adani project has hit a roadblock over a green nod. A few months back, the environment ministry had rejected the company’s coal-mining proposal in Tadoba region in Maharashtra, citing threat to tigers in the adjacent Tadoba Andheri tiger reserve.

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    DHFL plans to float housing finance subsidiary with IFC

    The proposed joint venture is expected to focus on low-cost housing projects

    Mortgage lender Dewan Housing Finance plans to float a housing finance subsidiary targeting the low-income segment in a joint venture partnership with International Finance Corporation (IFC).

    The joint venture, in which Dewan Housing will have around 80% stake, is expected to become operational in the next few months. Both companies are likely to jointly announce the venture in the next few days, reports PTI.

    “DHFL will have a majority holding in the company. The equity holding of IFC in the JV will be 20%. The idea of floating the JV is to focus on the low-income segment, where we see a great potential to explore,” Dewan Housing’s CMD Kapil Wadhawan told reporters.

    The proposed company, which will focus more on States where low-income population is more, plans to disburse loans up to Rs5 lakh and would target those whose monthly income is as low as even Rs3,500-Rs4,000, Mr Wadhawan said.

    DHFL is currently in the process of applying for the required regulatory clearance from the National Housing Bank, he said.

    Recently, Kerala-based Muthoot Pappachan Group had announced its plans to set up a home-loan subsidiary in the affordable housing segment and is expected to seek the necessary regulatory clearance for the project soon.

    Presently, DHFL has a total asset-base of around Rs10,000 crore and a customer base of Rs1,75,000 crore. In FY10, the company disbursed Rs3,500 crore worth of loans and has targeted to take this number to Rs5,000 crore in FY11, Mr Wadhawan said.

    DHFL expects to take its total asset-base to Rs25,000 crore by 2013 from Rs 10,000 crore at present, he said.

    The mortgage lender also has plans to apply for a banking license when the Reserve Bank of India announces its guidelines in this regard, he said.

    “We will stake a claim for a banking license. This is just a natural progression for us (to enter the commercial banking space),” Mr Wadhawan said.

    With a view to fund its expansion plans, DHFL plans to raise around Rs 5,000 crore of capital in the current fiscal. Out of this, the company plans to raise Rs 500 crore equity in the next few weeks, he said. The rest of the amount will be raised as debt through various instruments.

    Mr Wadhawan added that a likely rise in the RBI’s key rates is expected to put an upward pressure on interest rates in the industry in the near future.

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