Joginder Pal Gupta, a resident of Chandigarh has received compensation after a local branch of Punjab National Bank (PNB) mistakenly encashed his fixed deposit receipts (FDRs) without his consent at a lower interest rate
The District Consumer Disputes Redressal Commission has fined a Chandigarh-based bank for unlawfully making the transaction to encash the FDRs without the consent of the account holder. Mr Joginder Pal Gupta has accused PNB’s Sector 37 -D branch of breaching his trust by prematurely encashing his FDRs at lower interest rates.
Gupta acting as manager of the Hindu Undivided Family “Karta” m invested Rs 36,16,080 in five FDRs with the bank in June 2018. These FDRs reportedly offered an interest rate of 6.05% per annum. However, in December 2022, Mr. Gupta alleged that the bank credited only 8,35,560 to his account breaking the FDR at 5.3% instead of 6.05% per annum, which was too without the consent of the complainant. He added that the bank broke the FDR without prior notice and failed to resolve the issue despite his complaint.
Dissatisfied with the Bank’s response Mr, Gupta reached out to the Banking Ombudsman, Sector 17, Chandigarh. The ombudsman’s order, dated March 22, 2023, directed the bank to pay Rs 5000 as compensation for the closure of the premature FDRs. However, the order also allowed Mr. Gupta to pursue further legal action if unsatisfied.
After this, Mr Gupta filed a complaint with the district Consumer Disputes Redressal Commission for further satisfaction. The commission realized that encashment of FDRs before their maturity at lower interest rates and that too without consent constituted “deficiency in service” and “unfair trade practice” on the part of the bank.
The commission further acknowledged that the bank is obligated to pay the promised interest rate (6.05%) on the FDRs. As compensation, the commission directed the banks to pay INR 64,123, which is the difference between the amount credited at the lower interest rate and the promised interest rate, along 7% interest rate per annum from August 20, 2023, until the date of payment realization.
Meanwhile, in its defense, the bank claimed, Mr. Gupta himself initiated the procedure for closure after he felt dissatisfied with the provided interest rates. Still, the commission found the bank’s action to be in clear violation of fair banking practices, underscoring the importance of transparency and consent of customers in financial transactions.
This ruling clarifies the need for upholding consumer rights and holding financial institutions accountable for their actions. As more cases of unauthorized transactions have come to light over the past few years, regulatory bodies must remain vigilant and assertive in safeguarding their rights in the realm of financial institutions. These kinds of verdicts can potentially harm the reputation of the banks and should lead to strict internal controls to prevent similar incidents from happening.
This case also underscores the importance of bank customers to be vigilant. All the bank-related documents must be carefully read so that detailed terms and conditions can be understood. It is also imperative to establish clear and transparent communication with the bank’s representative so that any kind of financial loss can be saved beforehand.
