Know The Law | Banks' Liability When Customers Lose Money Due To Unauthorised Transactions

While upholding State Bank of India's liability for a fraudulent and unauthorized transaction reported in a customer's bank account, the Supreme Court recently observed that banks cannot shy away from the responsibility to safeguard their customers from unauthorized transactions reported from their accounts.The order was passed in the case of a customer who indulged in online shopping and. While upholding State Bank of India's liability for a fraudulent and unauthorized transaction reported in a customer's bank account, the Supreme Court recently observed that banks cannot shy away from the responsibility to safeguard their customers from unauthorized transactions reported from their accounts. In relation to the RBI circular dated July 6, 2017, it was observed, "The RBl's circular specifically states that customers bear no liability in cases of third-party breaches where the fault does not lie with the bank or the customer, but elsewhere in the system, The only requirement for customers, as per the circular, is to promptly report any unauthorized transactions to their bank to enable account blocking. ♦ Banks Ought To Reverse Unauthorized Transactions If Informed Within 3 Days, Chandigarh District Commission Holds Standard Chartered Bank Liable In March, 2024, Chandigarh District Commission held Standard Chartered Bank liable to reverse Rs.