How an ATM complaint over Rs 400 snowballed into Rs 58,700 consumer court penalty for SBI

‘No valid justification’

• The evidence of record clearly shows that the respondent took his grievance to the customer care department as well as to the nodal officer of the appellant (bank), but in vain, the consumer court observed.
• The appellant has given no valid justification as to why they did not comply with the Reserve Bank of India’s (RBI) mandate of resolving failed ATM transaction complaints within seven working days.
• The evaluation of the evidence made by the district commission is found to us to be correct, and its findings are based on sound reasoning.
• There is no error of legal infirmity in the impugned judgment.
• We are of the view that there is absolutely no merit in the appeal and it deserves to be dismissed. Consequently, the impugned judgment will have to be confirmed.

ATM dispensed Rs 1,100 instead of Rs 1,500

The case dates back to October 1, 2016, when Aurangabad resident Samadhan Bhagwan Wankhede visited an ATM located at Government Engineering College to withdraw Rs 1,500 from his account. According to Wankhede, the ATM dispensed only Rs 1,100.

Believing it to be a technical error, he immediately approached the bank and formally lodged a complaint on October 4, 2016, seeking reversal of the missing Rs 400. But instead of a quick resolution, the matter dragged on for years.

The commission noted that despite repeated representations to the bank’s customer care department, nodal officer and ombudsman, the customer failed to get relief.

RBI rule became SBI’s biggest setback

• Under RBI rules, failure to resolve failed ATM transaction complaints within seven working days attracts compensation of Rs 100 per day payable to the customer.
• That provision dramatically escalated the cost of the dispute for the bank.
• The District Consumer Disputes Redressal Commission at Aurangabad earlier directed the bank to pay compensation of Rs 47,700 for 477 days of delay, apart from Rs 1,000 towards litigation costs.
• When the SBI challenged the order before the state commission, the bank suffered another setback.
• The commission imposed an additional Rs 10,000 as appeal costs while dismissing the appeal, taking the total amount payable to nearly Rs 58,700 over a dispute involving just Rs 400.

SBI blamed merger with State Bank of Hyderabad

• During the appeal proceedings, the bank’s counsel argued that the State Bank of Hyderabad had merged with SBI on February 22, 2017.
• The bank contended that notices in the consumer complaint were sent to the old entity, leaving SBI unaware of the proceedings before the district commission.
• The bank also questioned whether there was sufficient proof that the customer had actually received less cash from the ATM.
• However, the commission rejected the argument outright.
• It pointed out that Wankhede had filed his complaint months before the merger took place and observed that SBI inherited all liabilities and responsibilities after the merger.
• A merger is a process that carries the assets and liabilities of the former company to the entity in which it is so merged, the commission noted.

‘Bank failed to justify delay’

The commission further observed that the bank failed to provide any valid explanation for not complying with the RBI’s seven-working-day timeline for resolving ATM disputes. “There is no valid justification” for the delay, the bench said while affirming the findings of the district commission.

The appeal, filed on July 17, 2018, was finally dismissed on May 20, nearly a decade after the original ATM transaction dispute arose.

For ordinary banking customers, the ruling delivers a sharp reminder that even a small unresolved ATM discrepancy can snowball into a major financial and legal liability for banks if complaints are ignored.