Don’t let banks cheat you
Pushpa Girimaji

In May, 1997, 71-year-old Uma Shankar Bhatt deposits Rs 15 lakh in his account at a bank in Kolkata. Five months hence, when he went to withdraw some money, he was told that there was no money in his account. He was asked: "Don’t you remember you gave an authorisation letter for transferring the entire amount in your account to the account of Bajrang General Traders?"

Since he has neither given any such authorisation letter nor knows any Bajrang General Traders, Bhatt is completely taken aback. He protests, but no one is willing to listen to him. This is not a scene out of a detective movie but the events as they unfolded before Bhatt on that fateful day in October, 1997. The bank manager, in collusion with Bajrang General Traders, a couple of bank clerks and others had forged Bhatt’s signature and misappropriated the money, just as he had done with other depositors. But the bank was unwilling to admit it and return his money.

Even when Bhatt sought the help of the consumer court to get back his money, instead of admitting its mistake, the bank put up a stiff resistance and argued that the money was transferred at Bhatt’s behest. This, despite knowing the age of the customer and the setbacks in health that he had suffered following the loss of his money. First the bank argued that the case was time-barred. Then it contended that the apex court has no jurisdiction to hear the case. Next it alleged that the money was transferred on the basis of a letter written by Bhatt and that it was for him to prove that his signature was forged.

When the court asked the bank to produce that letter, the bank said that it had been seized by the CBI, investigating into the fraud. The highest consumer court in the country expressed displeasure at the behaviour of the bank and observed that if only the bank had owned up its mistake and made amends for it, a senior citizen would not have been forced to knock at the doors of the court for resolution of his complaint.

Dismissing the contentions of the bank, the court pointed out that first of all when the bank had issued a cheque book to the customer, it was the duty of the bank to insist on a cheque for transfer of the amount. Secondly, it was for the bank to establish that the signature on the letter was that of the complainant, but the bank had failed to produce it. Third, the CBI had arrived at the conclusion that a large amount was withdrawn from the accounts of depositors by the then branch manager by committing forgery in collusion with others.

The National Consumer Disputes Redressal Commission also remarked on the care that ought to be exhibited by bank officials while discharging their duty. Observed the commission: "A manager or a cashier of a bank is expected to have a reasonable degree of intelligence and knowledge ordinarily required of a person in his position to discharge his duties. If that is not done, and the amount is disbursed to the third party, without verification of the signature of the depositor, or doubting/suspecting as to why no cheque was used as an instrument of transfer, the fault lies with the bank. Further, if the officers of the bank were not party to the fraud, they would have immediately inquired as to what was the necessity of transferring the entire bank balance by a simple letter."

In the end, the national commission directed the bank to refund the amount of Rs 15 lakh to the complainant, along with interest calculated at the rate of 12 per cent per annum. It also awarded Rs 50,000 as compensation. The banking regulator, the Reserve Bank of India, has been consistently advising banks to treat customers fairly. It should now come up with stringent measures to punish those banks that fail to follow this advice.