Banking on security

A recent judgment underscores the need for banks to protect the interests of depositors,
writes Pushpa Girimaji

Once upon a time, banks had their doors wide open and no gun-toting security guard. Increasing robberies changed that, forcing banks to adopt measures like securing the doors with a chain to restrict entry/exit besides posting a guard at the entrance. Obviously, that is not enough.

A recent order of the apex consumer court should come as a warning to all banks that do not take safety and security on their premises seriously. The order makes it clear that failure to provide adequate safety and security to customers and their money constitutes deficiency in service. Banks are liable to pay for any loss or suffering caused to the customer as a result of such a deficiency.

The order flows from a complaint filed by Col D. S. Sachar, who had a current account with the Mohali branch of the Punjab and Sind Bank in Chandigarh. On April 6, 1999, he went with his wife to the bank to deposit the proceeds from the sale of a site, which amounted to Rs 45,000. Even as he stood at the counter to pay the money someone snatched the bundle of notes, rushed out, got on to a scooter outside and fled.

Colonel Sachar’s complaint was that the armed guard, supposed to be on duty at the door of the bank, was nowhere in sight. Further, the bank had not even secured its door with a chain, restricting the entry/ exit of people. Even though he shouted for help, there was no attempt on the part of any employee to sound the alarm or catch the culprit, Colonel Sachar alleged in his complaint before the court. He also placed before the court the Reserve Bank of India guidelines on security on the bank premises in support of his allegation that the bank had failed to take adequate safety measures.

The court examined the RBI guidelines which, under the heading “Duties of Bank Guards”, said: “The basic duty of the armed guard of the bank is to provide protection to the bank’s cash/valuables and property and employees/customers against dacoity/robbery, snatching, pilferage, sabotage. At present, the bank armed guards are provided with 12-bore DBBL guns to protect the interests of the bank, its employees and customers against criminals”.

The court noted that even though the gunman and the bank manager had filed affidavits saying that the gunman was on duty on that day, the affidavits were silent on any attempt made by the gunman or any employee of the bank to apprehend the snatcher.

The court said ensuring the safety of the money to be deposited or withdrawn by the customer while on the bank’s premises was the duty of the bank. Disagreeing with the orders of the District Forum and the State Commission, Chandigarh, which had taken a contrary view, it directed the bank to pay the customer Rs 45,000 along with interest at the rate of nine per cent and also Rs 5,000 towards the cost of litigation. (Col D. S. Sachar vs Punjab and Sind Bank, Revision Petition no 1046 of 2003, decided on April 28, 2005).

The decision in this case is extremely important from the point of view of consumers as it protects their rights as depositors and underscores the need for banks to provide better security for depositors. In fact, failure to do so may prove costly for the banks.