5 min readNew DelhiAug 14, 2026 12:05 PM IST
First published on: Aug 13, 2026 at 08:00 AM IST
A Kerala consumer commission has found Federal Bank deficient in service and directed it to recredit Rs 9,854 lost by a customer in two unauthorised UPI transactions. Holding that the bank could not make him bear the loss merely based on “perceived negligence”, the commission directed the bank to refund the amount and pay Rs 8,000 as compensation.
President P V Jayarajan, along with members Preetha G Nair and Viju V R, was hearing the complaint filed by a man who claimed that the bank had initially credited back the amount debited through the fraudulent transactions in 2021 but later reversed the credit.
“In the absence of the bank failing to cogently establish through reliable materials that the complainant had not acted diligently or that he had partaken in the unauthorised activity even though unknowingly, the liability to cover the loss squarely falls on the bank and the bank cannot make the complainant to suffer the loss towards the unauthorised electronic transactions based on perceived negligence of the customers,” the August 5 order read.
Scratched card, amount debited
The man claimed that he had a savings account with Federal Bank and that on July 13, 2021, while browsing social media, a scratch card appeared stating “unlimited cash back” from PhonePe, carrying its logo and font.
He said that, being a subscriber of Google Pay and PhonePe, he was familiar with receiving scratch cards from these platforms and therefore scratched the card twice. However, he found that Rs 4,885 and Rs 4,969 were immediately debited from his account.
Realising that he had fallen prey to fraud, he immediately complained to the bank about the two unauthorised transactions. He claimed that the bank understood that it was a fraudster’s act and promised to recover the money. The bank subsequently credited both amounts back to his account on July 15, 2021.
However, on August 4, 2021, the bank reversed the credit and took back the Rs 9,854. Aggrieved, the man moved the commission, alleging deficiency in service and unfair trade practice on the part of the bank.
‘Man took all necessary steps’
The commission held that the diligent acts of the complainant clearly show that he had taken all the necessary steps upon coming to know of the unauthorised transactions.
It further held that the bank had failed to produce reliable material showing that the complainant had acted negligently or had knowingly or unknowingly participated in the unauthorised transactions. “There being no credible material to substantiate the perceived negligence on the part of the complainant, we find that as per the RBI circular, the Bank is bound to recredit the amount back to the account of the complainant,” it added.
Accordingly, the commission directed the bank to remit a sum of Rs.9,854 to the account of the complainant, along with Rs 5,000 towards compensation and Rs 3,000 being the cost of these proceedings, to the complainant within 30 days.
Bank’s defence
The bank was represented by advocate S Raghukuma, who submitted that the bank has no role or involvement regarding the scratch card and the related transactions. The bank further argued it conducted a detailed enquiry and found that the complainant was actively doing UPI transactions and was initiating UPI Debits almost every day.
It was submitted that either the complainant or a person to whom he has shared his UPI has done the transaction, for which the complainant is alone liable and responsible. It was added that while doing the UPI transactions, the account holder has to enter his payment address and UPI PIN as the first step, and then only the UPI payment will be completed and the amount will be debited.
The bank further submitted that these two details are known only to the account holder, and without sharing the same, the said transactions cannot be effected. It was added that, on detailed enquiry, it was found that the transactions had happened with the credentials privy to the complainant and found that the same were done with the consent of the customer.
Takeway
The ruling highlights that a bank cannot shift the loss of an unauthorised electronic transaction onto a customer merely by alleging negligence; it must produce material to establish that the customer was negligent or involved in the transaction.
For consumer-related grievances, individuals may contact the consumer helpline in their respective states and Union territories (Kerala: 1800-425-1550) or call the National Consumer Helpline at 1915 for assistance.
Don’t miss out on these stories
Events firm ‘quits’ amid bride’s pre-wedding functions, father wins Rs 6.7 lakh payout
Policy cancelled over ‘hypertension’, insurer ordered to restore it, pay Rs 1.10 lakh
Kerala man wins Rs 1.36 lakh payout after missing connecting flight to Riyadh
The commission noted that the bank had initially credited the amount back to the man’s account but later reversed the credit, claiming that the transactions were carried out using his UPI credentials. (AI-generated image) 
Share
