In a landmark decision, Maharashtra IT Secretary asks Bank of India to pay Rs3.50 lakh to online fraud victim
In a significant order that will bring relief to all those who are victims of online frauds, the Secretary of Information Technology (IT) in Maharashtra has asked Bank of India to pay Rs3.50 lakh to a victim of online fraud. As per the IT Act, 2000 and a notification issued on 25 March 2003, IT Secretaries of every State and Union Territory in India act as 'Adjudicating Officer' in their respective State or Union Territory.
 
In a recent order, VK Gautam, IT Secretary, who is also Adjudicating Officer under the IT Act in Maharashtra, held that Bank of India owns, controls and operates sensitive personal data of its customers but failed to implement reasonable security practices and procedures leading to loss to complainant Nirmalkumar Athawale from Kamptee, near Nagpur. Holding Bank of India liable for violation of Section 43A of the IT Act, the IT Secretary asked it to pay Rs2.50 lakh towards wrong transactions and Rs1 lakh as legal charges and compensation for causing mental harassment.
 
The case is from 2015, when Mr Athawale found that Rs3 lakh were withdrawn from his joint account at Bank of India's Vaishali Nagar, Kamptee branch. He lodged a complaint against this unauthorised withdrawal with the Bank branch and also with the Police. 
 
Through its internal mechanism, the Bank was able to recover only Rs50,000 out of the Rs3 lakh withdrawn from Mr Athawale's account. Under guidance from Adv Mahendra Limaye, a Cyber Legal Consultant from Nagpur, Mr Athawale filed a civil suit before the IT Secretary. 
 
After hearing both the sides Mr Gautam, the IT Secretary held that the Bank has not only erred but also committed serious security breach by providing single customer identification code (CID) for two accounts with different constitutions besides providing net banking facility without any request from the customer. The Bank also failed to send messages for withdrawal of Rs3 lakh to Mr Athawale. 
 
"(The) Bank has caused serious compromise with reasonable security practises," the IT Secretary said while holding Bank of India guilty under sections 43A, G, and H of IT Act. He asked the Bank to pay Rs2.50 lakh towards wrong transactions charged on Mr Athawale's account and Rs1 lakh towards legal charges and for causing mental harassment.
 
As per IT Act, the Adjudicating Officer (IT Secretary) has sole jurisdiction for adjudicating on any contravention of IT Act 2000/8 and to award compensation to those who have suffered a loss of less than Rs5 crore. The Adjudicating Officer has power of a Civil Court in resolving cybercrime cases.
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    COMMENTS

    J. P. Shah

    2 years ago

    There is delay in consumer foras. This IT route is fast and one stop method which at times work properly

    SuchindranathAiyerS

    2 years ago

    Mr. Athawale was lucky. In my experience, law, precedents, procedures and facts are not of much importance to those exercising judicial powers in India.

    REPLY

    Louvina Andrade

    In Reply to SuchindranathAiyerS 2 years ago

    Yes. You are absolutely right. Countless such frauds occur & the Banks get away with it, because the Account holders are unaware of their rights of redressal.

    SBI may reduce minimum balance requirement: Report
    State Bank of India (SBI), the country's largest lender, may reduce its requirement for minimum average balance on savings account says a media report.
     
    Quoting unnamed sources, the Economic Times, in its report says, "the bank is looking at bringing down the minimum balance requirement to around Rs1,000 but is yet to take a call. While SBI's Rs3,000 minimum balance requirement is higher than what is charged by several public sector banks, it is the lowest among large private banks."
     
    As reported earlier, the state-run lender had earned a whopping Rs1,771 crore as penalty income from customers for not maintaining minimum average balance during April to November 2017. This penalty income earned by SBI is more than its net profit of Rs1,581.55 crore earned during July to September 2017 quarter.
     
    Last year in September and October, responding to strong protests by customers, expressed most vociferously in social media, SBI while reviewing MAB requirements and charges for non-maintenance of MAB, had also decided to waive charges for closing savings bank account that are in existence for over six months. For non-maintenance of MAB, SBI has revised downward its charges ranging from 20% to 50% across all population groups and categories. The charges at semi-urban and rural centres range from Rs20 to Rs40 and at urban and metro centres from Rs30 to Rs50. The revised MAB requirement and charges will become applicable from October 2017.
     
    Even the employees of Reserve Bank of India (RBI) raised the issue of extortionate banking service charges by SBI. In September 2017 letter, Samir Ghosh, General Secretary of All India Reserve Bank Employees Association (AIRBEA), told RBI Governor Dr Urjit Patel, that "We are being constrained to draw your kind attention to certain recent business decisions of the country's largest bank SBI like withdraw cash only three times a month free of charge and fine failure to maintain balance." 
     
    Highlighting the apathy of small depositors, the employees union says, for savings bank accounts held in metro branches, the required minimum average monthly balance is Rs5,000, and if the amount falls below Rs3,750, SBI levies a penalty of Rs100 plus service tax. The charges and minimum account balance vary across metro, urban, semi-urban and rural areas. According to reports, during the June 2017 quarter, SBI had earned Rs235 crore only from such fines, which goes directly to its net profit.
     
    Moneylife Foundation has been at the forefront of speaking up for bank customers. Earlier, on 4th July, thousands of people joined the unique #TweetMorcha against arbitrary bank charges, with the hashtag #BankSeBachao trending at top spot in India and also featuring in worldwide trends that afternoon. People from across the globe sent tweets to @NarendraModi and @ArunJaitley with the hashtags of #BankSeBachao and #TweetMorcha. 
     
    An online petition launched by us on Change.org has garnered more than two lakh signatures. (Sign the Petition). One of the key points of the petition is about unreasonable and unfair bank charges. "Frequent increase in charges and billing customers by stealth through opt-out clauses that are not noticeable must be stopped immediately. For e.g. HDFC Bank started levying charges for an invite-only program, which unethically assumes that the customer is already in and willing to pay for it. The levy is stopped only when the consumer notices it and calls the bank to protest; this too is not an easy process," the petition says.
     
    With RBI’s own staff now raising issue of unfair charges levied by SBI, it is high time that the regulator wakes up to ground level reality and take necessary action against such practices. 
     
    Earlier on 12 May 2017, a group, including well known NGOs, trade unions, finance editors and experts, presented a 1,100 page printout of over 100,000 signatures to an online petition at Change.org to M Veerappa Moily, Chairman of Parliamentary Standing Committee on Finance.
     
    The Moneylife Foundation Campaign has certainly ruffled several feathers at the Reserve Bank as can be seen by some decisions taken by the regulator. This includes limiting customer liability, asking banks to share details of transactions in passbook or statements, expanding the role of the Banking Ombudsman. However, there is so much more that the Reserve Bank needs to do, like making its Consumer Charter more effective and effectively curtailing the practice of mis-selling and unfair service charges.
     
    SBI have a network of about 24,000 branches (post merger of associate banks with SBI) and more than 40 crore customers of which 31 crore have savings bank accounts.  
     
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    COMMENTS

    VIMAL KUMAR

    2 years ago

    Govt. wanted digital India for transparency in financial dealings .encouraged every one to open accounts in bank. we poor soul complied. Banks took this as an opportunity to fill their coffers which was looted by the so called rich and influential and powerful people.
    Now we are being levied with SMS charges,minimum balance charges,ATM charges,check book charges,withdrawal charge,deposit charges etc etc. Recently an old woman in kerala received Rs .3300 as pension from Govt . bank deducted Rs.3028 as charges for non keeping minimum balance. when the news came in paper,the bank issued a statement stating it as an error and returned the money. this is not an isolated case. there are so many illiterate who doesn't know where to complaint /how to complaint.

    Gurudutt Mundkur

    2 years ago

    The Average Quarterly Balance in Central Bank of India is Rs 1,000/=.
    It is nil for Senior Citizens.

    PradipKumar Chakrabarty

    2 years ago

    Stop handing out CHEAP gimmicks like these! Restore the interest rates of Savings Bank account. you have given to poor savers untold miseries!

    k.mohanarangam k.mohanarangam

    2 years ago

    charges for not maintaining
    stipulated minimum balance
    in savings bank accounts by
    customers can be given a
    second thought by sbi
    considering the ability to pay
    the charge by the account holder as majority of them are
    salaried and low income group

    SBI base cut: Hardly anyone will benefit from this so-called “New Year gift”
    India’s largest bank by deposits, the State Bank of India (SBI) has reduced its base rate—an older lending benchmark—by 30 basis points (bps) to 8.65%. Theoretically, this reduction is expected to benefit borrowers who had taken floating rate loans before April 2016, when the base rate was replaced by the current benchmark—the marginal cost of lending rate (MCLR). 
     
    Reports in The Times of India and other publications unthinking parrot the line that with this cut, millions of borrowers, mainly home loan borrowers and small and medium enterprises, are expected to benefit. PK Gupta, managing director—retail and digital banking—of SBI claimed, "The reduction in base rate is a new year gift to the bank's loyal customers as a large number of consumers who have their loans linked to the base rate will be benefited. This reduction is part of the bank's efforts to ensure transmission of reduction in the policy rates in the recent past. Approximately 80 lakh customers will gain from this move." 
    Will they?
     
    Only if SBI does not play a cat and mouse game with its borrowers. 
     
    They will benefit only if SBI starts unilaterally charging its customers the new lower rate. But if SBI sticks to the fine print and follows the practices banks have followed in the past, it will do the following: one, not intimate its borrowers that 30 bps cut has taken place; two, those who find out on their own and contact SBI, after reading articles like these, will be asked to come to the bank branches; three, charge them fees to change over which will cut into the benefit. 
     
    Banks are guilty of each of these practices -- and worse – in the past. Each time the interest rates rose, banks were quick to charge customers the new higher rate; when interest rates fell, banks have tried their best to deny the benefit to existing borrowers by multiple means. Until September last year, there was no way to prove this because banks refuse to share any data on this and Reserve Bank’s policy was to let banks do whatever they wanted to, even if it meant shortchanging customers.
     
    But in late September last year, an internal study group of the Reserve Bank of India (RBI) submitted a report on how the floating interest regime worked. It came out with scandalous findings. Here is what it said of how the base rate worked in practice. 
     
    “The base rate system, with a link to the banks’ cost of funds, was expected to facilitate better pricing of loans, enhance transparency in lending rates and improve the assessment of the transmission of monetary policy. In practice, flexibility accorded to banks in the determination of cost of funds – average, marginal or blended cost – caused opacity in the determination of lending rates by banks and clouded an accurate assessment of the speed and strength of the transmission. Moreover, the discrimination in the pricing of credit between the new and old customers continued, as banks often adjusted the spread over the base rate to benefit the new borrowers.” 
     
    The fact is banks made no effort to guide small businesses and retail customers from the base rate system to the MCLR regime and from the higher interest rate to lower interest rate. Banks do not disseminate the switchover option through the branches of the banks or their websites or SMS and telephones. The has led the RBI Study Group to recommend:
     
    “It should be made mandatory for banks to display prominently in each branch the base rate/MCLR (tenor-wise) and the weighted average lending rates on loans across sectors separately for loans linked to the base rate and the MCLR. The same information should also be hosted prominently on each bank’s website. The Reserve Bank could prescribe the format and the manner in which a minimum set of standardised data needs to be displayed in branches/hosted on banks’ websites. The Indian Banks’ Association (IBA), or any other agency considered appropriate by banks, could also disseminate bank-wise information on its website in the same manner in which each bank is required to disseminate information on its own website so as to facilitate easy comparison of lending rates across sectors and banks.”
     
    Banks have preferred to play a cat and mouse game with the borrowers. Whoever found out on their own and came forward got a tiny bit of reduction. Those who did not continued to get charged by the higher rate, under the pretext that a loan is a contract and customers must come forward and discuss with banks if they want a change in terms. This legally correct position was really self-serving for banks because they could then continue to fleece customers with the old rate. Ask yourself, if 80 lakh customers of SBI are still on an older, higher rate, who has been benefiting?
     
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    COMMENTS

    VIMAL KUMAR

    2 years ago

    SBI never inform their customers about rate cuts. Even when you approach them they mislead you. I had the bitter experience once with my home loan . The standard wordings are .."these cuts are for loans above 50lakhs, your loan is a small amount .after paying the processing charges there wont be any benefit for you. we have to get approval from higher ups that may take few months etc etc". thank god .my loan gets over within six months.

    Abhishek Singh

    2 years ago

    Misleading article. If base rate goes down then so does all the floating rate loans linked to base rate (by the same basis points) as the spread is fixed. There is no need to go to bank for that.

    Karthikeyan

    2 years ago

    A person I know got a message from SBI that his interest rate is now reduced to reflect the change in bps.

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