Delhi High Court asks SBI to compensate man who lost Rs 2.6 lakh to internet banking fraud, here’s what the court found ‘wrong’

A Delhi High Court he ordered State Bank of India (SBI) to compensate a customer, Hare Ram Singh, who lost Rs 2.6 lakh to a phishing attack. The court found SBI negligent in handling Singh’s complaint and failing to prevent fraudulent transactions.
Singh, a victim of a cyber attack, promptly notified SBI’s customer care and branch manager. However, the bank failed to provide timely assistance. A few months later, SBI rejected Singh’s claim, citing the use of OTPs and Singh’s clicking on a malicious link as reasons for the unauthorized transactions.
The High Court, however, disagreed with the SBI’s stand. Justice Dharmesh Sharma noted the bank’s “glaring service deficiency” in its response to the complaint. The court pointed out that SBI’s failure to act quickly and block the suspicious transactions amounted to a breach of its duty of care. “It must be presumed that the petitioner suffered pecuniary loss because of the bank’s failure to implement a system to prevent such withdrawals,” the Court said.
The court also highlighted SBI’s failure to comply with Reserve Bank of India(RBI) guidelines on security of digital payments. It ruled that the transactions fell under the ‘zero liability’ category, making SBI liable for the loss.
The court ordered SBI to refund Singh the lost amount with interest and pay a token compensation of Rs 25,000.
The ruling underscores the importance of banks taking proactive measures to protect their customers from cyber attacks. It also serves as a reminder that banks have a responsibility to act quickly and effectively in responding to such incidents.