Banks must reverse wrong debit in 7 days or compensate

It’s now more than two years since the Reserve Bank has asked all banks to pay consumers who are victims of failed ATM transactions, compensation at the rate of R100 per day, if the amount wrongly deducted from their accounts is not reimbursed within the stipulated time frame. Pushpa Girimaji reports.

It’s now more than two years since the Reserve Bank has asked all banks to pay consumers who are victims of failed ATM transactions, compensation at the rate of Rs 100 per day, if the amount wrongly deducted from their accounts is not reimbursed within the stipulated time frame.

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While earlier, banks had 12 days to resolve the issue, from July 1 this year, they have seven days. In other words, banks have to reverse the wrong debit within seven days or else pay compensation at the rate of Rs 100 per day for every day’s delay and pay this amount voluntarily, without waiting for the consumer to ask for it.

Yet, banks continue to violate this diktat of the regulator. Take as an example, this case quoted in the latest annual report on the Banking Ombudsman Scheme: A consumer tries to withdraw R500 from his account through an ATM, but the machine dispenses only R400. His bank, however, debits Rs 500 from his account and then takes as long as five weeks to reverse the wrong debit!

The bank, here, blatantly violates the regulator’s mandate on two counts: First and foremost, it does not correct the debit error within the time frame given by the regulator. Second, it fails to pay the stipulated penalty to the consumer.

Eventually, the consumer is forced to go to the Ombudsman to get what is due to him as penalty: Rs 16,200. An RBI official says that in many such cases, banks have had to pay as much as Rs 50,000 or even more as compensation to the consumer.

All this brings us to the imperative need for detailed information on the issue.

The regulator ought to respect the consumers’ Right to Information and give answers to the following questions (it can be put up on the RBI website): (a) the total number of complaints received by banks on failed ATM transactions

and wrong debits; (b) the time taken by them to reverse the wrong debit.

Consumers also need to know about (c) the number of cases where the rectification was not done within the stipulated time and the quantum of compensation paid; (d) the number of cases where this was paid voluntarily and on the intervention of the ombudsman; (e) the penalty imposed by the regulator on those banks which failed to follow its directive and (f) the action taken by the RBI against banks that failed to send quarterly reports on the subject.

In addition, consumers should be told about the steps being taken to eliminate the problem of failed transactions and ensure flawless disbursal of money by the machines.

The information would not only help consumers asses the quality of service provided by individual banks but also the way the regulator enforces compliance of this particular directive. It will also force banks to perform better.

Nakshtra Jain: This happened in June 2009, when I tried to withdraw Rs 700 from an ATM in Bangalore. I got a message saying there was a connectivity problem and the machine did not dispense the money. However, the amount was deducted from my account and till today, it has not been credited despite several complaints. I even complained to the Banking Ombudsman, but got no reply. How do I get my money back?

Answer: There is a time limit of 12-13 months within which a complaint has to be filed before the Ombudsman. I do not know whether you filed it within the limitation period, but even otherwise, you should have got a reply. I would suggest that you write to the Deputy Governor (in-charge of the Banking Ombudsman scheme), RBI, bringing these facts to his notice and send it to the Customer Service Department.