Money & Banking

ATM transaction fails, but account debited

| Updated on March 18, 2011


In a case of failed ATM transaction, the account was debited though no cash was dispensed.

It was observed that as per the banking ombudsman's orders the amount was credited to the complainant's account, but the bank did not pay the penal interest in terms of extant RBI instructions for the delayed period credit of around two months.

The bank was directed to pay penalty at Rs 100 a day amounting to Rs 6,500.

Irregular sale of shares offered as a security: The complainant was enjoying an LAS (loan against securities) with a credit of Rs 20 lakh from a foreign bank with 50 per cent margin. Since value of the securities had drastically reduced due to the meltdown in the equity market, the bank sent a letter dated October 23, 2008, asking him to regularise the account by October 28, 2008.

He deposited a cheque for Rs 4 lakh on October 27, 2008, itself which was credited to his account on October 29, 2008, and the account was thus regularised. However, another department of the bank sold his margin shares aggregating Rs 10.33 lakh on October 29, 2008, and credited the same to the loan account.

The ombudsman identified the deficiency in service but closed the case under Clause 13(c) of BOS.

The bank admitted its mistake of unauthorisedly selling his margin securities and offered him Rs 1.55 lakh on November 30, 2009, towards compensation which was rejected by him. At the appeal stage, the bank improved its offer and credited to his account Rs 8.78 lakh being the price differential in the value of the margin securities unauthorisedly sold by it.

The Appellate Authority (AA) observed that since the account was regularised in time and was well within the prudential limits prescribed by the RBI, the bank's action of selling the securities on October 29, 2008, was unwarranted and indicative of the lack of communication/coordination between various departments in the bank.

The AA directed the bank to compensate the complainant by restoring the margin securities sold in his demat account by way of crediting into his account the price difference of the shares between October 29, 2008 (date of unauthorised sale) and date of the AA's order (April 6, 2010) after adjusting Rs 8.33 lakh credited to his account.

Further, all other benefits such as dividend, right issue, bonus issue, and so on, if any, declared during the period should be passed on to the appellant and the bank should pay a compensation of Rs 1 lakh towards the mental harassment and agony suffered by the complainant, a senior citizen.

(Source: Annual report of the Banking Ombudsman Scheme.)

Published on March 18, 2011

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