Failed ATM withdrawal? Delhi consumer court says banks must compensate customers

A consumer court in Delhi has ordered Bank of India to pay Rs 48,400 to a woman whose money was debited during a failed ATM transaction but was not refunded for several months, underlining banks’ responsibility in such cases under RBI rules.

The District Consumer Disputes Redressal Commission held the bank guilty of “deficiency in service” and said RBI guidelines are meant not only to ensure quick resolution of failed ATM transaction complaints, but also to fix accountability for delays in refunding customers’ money.

The order came on a complaint filed by Chanda, a resident of Jahangirpuri in north Delhi, who attempted to withdraw Rs 10,000 on May 26, 2022, from a Union Bank of India ATM.

Although the transaction failed and no cash was dispensed, the amount was debited from her account maintained with Bank of India.

According to the complaint, she approached the bank and formally raised the issue on June 7, 2022, seeking reversal of the amount. However, despite repeated representations, the money was not credited back to her account.

The Commission noted that both banks failed to appear before the forum despite notices being served, and the matter proceeded ex parte.

Citing RBI norms governing failed ATM transactions, the bench comprising President Divya Jyoti Jaipuriar and Member Rashmi Bansal observed that banks are required to reverse such debits within five days. If they fail to do so, customers are entitled to compensation of Rs 100 per day for the delay.

“The responsibility for resolution and compensation lies upon the card issuing bank, irrespective of whether the transaction was attempted at the ATM of another bank,” the Commission said.

The Commission further noted that the complainant had raised the grievance within the prescribed timeline and that the banks failed to produce any evidence showing that cash had actually been dispensed or that the amount was subsequently reversed.

“The hardship caused to a consumer due to wrongful debit from a bank account cannot be ignored,” the Commission observed, adding that customers trust banks to keep their money secure and promptly rectify such failed transactions.

In its May 22 order, the Commission directed Bank of India to refund the Rs 10,000 debited amount and also pay Rs 20,400 as compensation for delayed reversal, calculated at Rs 100 per day.

Additionally, the bank was directed to pay Rs 10,000 for mental agony and harassment, along with Rs 8,000 towards legal costs.

The court said the amount must be paid within 30 days, failing which it would attract 9 per cent annual interest until realisation.