Axis Bank Responds to a Cyber Crime Victim..
Axis Bank has been in the eye of a storm for some time now for various
kinds of frauds. Recently a customer in New Delhi-Gurugaon had found
that fraudsters had drawn money from his account through ATMs in Greece.
When the customer complained Bank initially resisted the complaint but
after the matter was taken to the Banking Ombudsman agreed to refund
amount of Rs. 664857.14 as per the advisory of Banking Ombudsman.
Now in yet another ATM fraud case in Mumbai, it is reported that the
Bank restored a balance of Rs 2 lakhs wrongly withdrawn from the account
of a TV actress Rashmi Gosh. The Bank officials have confirmed that
there are many such ATM frauds reported to them and they are pursuing
the police complaint. ..Related
Report
Naavi has been pointing out to Banks that any frauds of this nature or
in the Internet Banking scenario are the liabilities of the bank and it
is their responsibility to pursue the complaint with the Police. However
ICICI Bank and Punjab National Bank have been adamant and refusing to
take responsibility for the loss as well as pursuing police complaints.
There are atleast two known cases against Punjab National Bank in
Chennai amounting to around Rs 8 lakhs, one Case in Delhi for Rs 1.65
crores and another case in Nasik for around 17 lakhs pending against
Punjab National Bank. There are many more reported instances in which
customers have not yet initiated legal action against the Bank.
Cases against ICICI Bank have also been numerous. There are also
instances in Bank of India, State Bank of India and HDFC Bank where
there are pending cases in different stages.
It is found that all Banks including ICICI Bank and Punjab National Bank
have been selective in their response to Phishing and ATM frauds. In
certain cases they agree to refund and certain cases they resist without
any logic. Probably when they think that the customer can be bullied
they resist and challenge the customer to take the route of litigation.
But If the Customer is a celebrity or is otherwise well connected they
may respond better. The Mumbai case where Axis Bank has agreed to pay up
appears to be one such case.
Even the Banking Ombudsmen have not been consistent in their decisions.
While some Ombudsmen have given decisions in favour of the customer in
cases of Phishing and ATM frauds some have rejected the claims
principally on the ground that “The complaint requires examination of
elaborate evidences and is therefore beyond their jurisdiction”.
Recently the Bangalore Ombudsman went one step further and while
rejecting the complaint on the grounds of jurisdiction for evidentiary
reasons ignoring all other aspects suggesting that the bank had violated
the RBI code on customer service, he also advised that the customer does
not have the right to appeal.
Coming back to Axis Bank, recently a customer in Bangalore found that Rs
39 lakhs were fraudulently transferred from their Axis Bank account
through unauthorized access in which the customer had not responded to
any phishing mail. The Bank however has refused to refund the amount on
the first request. The matter is being pursued by the customer and the
next reaction of the Bank is awaited.
In the light of these inconsistent decisions of Banks in settling
straightforward customer disputes, which can be called “Discriminatory”,
“indicative of extraneous considerations” etc., , the recommendations of
the Damodar Committee on Customer Service in Banks constituted by
Reserve Bank of India needs to be specially noted.
Under Chapter 3 of the report, the Committee has pointed out In Internet
Banking, “There should be a secure total protection policy/zero
liability against loss for any customer induced transaction utilizing
technology through ATMs/POS/Online banking “etc.
It also states that the customer should not be made to be out of funds
when any loss is suffered on account of online/ATM banking transactions.
..An immediate temporary credit pending investigation should be
afforded”.
Further, it states “Banks in their systems should have facility of
customer behavior/purchase pattern etc. analysis and any attempt from an
unknown address / suspicious outlier debit transaction should be first
blocked and then informed over SMS to the customer. The transaction
should be allowed only after the customer authorizes the transaction.”
All the Phishing frauds provide very clear indication of unusual
transactions such as a rush of transactions, often at night time,
credits to unusual beneficiaries etc. Similarly the transactions at the
receiving end also indicate credits disproportionate to the balances
maintained, immediate withdrawal etc.
The observation of the committee therefore hits the nail on the head
pulling up the deficiencies in the Banks. Even earlier RBI has through
the Internet Banking guidelines and E Banking guidelines have repeatedly
warned the Banks that they need to absorb liabilities on account of such
frauds . Now, Damodar Committee report is a further reminder to the
Banks which hopefully will be taken note off by all Banks including Axis
bank, ICICI Bank, Punjab National Bank, Bank of India, HDFC bank and
others in similar situations.
The Damodar Committee recommendations will also now be considered as
guidelines for Adjudicating Officers, Cyber Appellate Tribunals, Banking
Ombudsmen, Consumer Forums as well as the Banks as the expectations from
the Bank’s side.
In the past some of the Banks have shown scant regard to RBI guidelines
and in certain cases have even tried to manipulate the recommendations
of committees in which they are allowed to participate as a
representative of the Banking industry. RBI has not been able to bring
them to discipline. It is time that RBI asserts itself and imposes hefty
fines on Banks who deliberately flout the guidelines. Naavi has even
demanded that in respect of one branch of ICICI Bank and one branch of
Punjab National Bank, RBI should consider withdrawal of the Banking
license as a punishment for violating the RBI guidelines.
If RBI takes such tough stand in atleast a couple of cases then Banks
may start respecting the regulatory authority of RBI
Naavi
August 11, 2011
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naavi@vsnl.com
