Banks go into denial mode and that affects consumers

Why do banks go into a denial mode whenever their customers complain about a fraud in the banking system? Whether it’s an Internet banking racket or an ATM fraud, the moment you complain, the bank’s first reaction is always to refute any such occurrence. When confronted with the evidence, they deny their complicity and blame the customer for whatever has happened. Such responses invariably delay the investigation, besides causing the victim, immense hardship and harassment.

Here’s one such shocking case narrated by a reader, a retired army officer. In October last year, his 70-year old sister, who lives with him, got a call from her bank asking her if she had sponsored the education of her grandson in a university in Australia and submitted for the purpose, a fixed deposit of ` 25 lakhs held by her. She was stunned by this question because she was not mar ried and had no children or grandchildren! And she had not sponsored anyone’s education.

On learning about the phone call from his sister, Col SS Ghuman immediately rushed to the bank, wanting to know how the confidentiality of the customer’s financial information had been breached . The bank told him that there was no such leakage of information from the bank and that they were just following up on a letter from an Australian university seeking confirmation of the FD with the bank!.

A worried Ghuman immediately asked the bank to lodge an FIR with the police and also change the numbers of the compromised FDs, as a precautionary measure. But the bank refused to do either. When he insisted, the general manager said he would change the FDs if the customer was willing to accept the loss of interest on the amount!

When his letters to the bank brought forth no results, Ghuman contacted the university and got the name of the student and an immigration agency in Amritsar which had sent the duplicate copy of his sister’s FD. He then lodged a police complaint and the subsequent investigations revealed how an ‘agent’ of the immigration agency had got in touch with an officer of the bank in Amritsar, bribed him and got a duplicate FD for the student.

The police is yet to complete its investigation and this could well be a big racket, involving more accounts. In fact Ghuman’s grievance is that the police investigation is too slow. And the bank, where his entire family has FDs, is unwilling to re gister a complaint even today., Ghuman says he is most worried about the security of the FDs, but the bank is least bothered.

The bank’s behavior in this case is highly condemnable. First and foremost, the bank had violated the confidentiality of the customer’s financial information, putting in jeopardy, the security of the customer as well as her money deposited with the bank. .

Second, when the customer complained, the bank should have immediately taken cognizance of it , lodged an FIR, brought the matter to the notice of the bank’s headquarters and initiated an enquiry to get to the root of the problem and taken appropriate measures to prevent recurrence.

T he bank did none of these, in contravention of the banking regulator’s instructions to banks on dealing with frauds.

Third, since the security of the customer’s account had been breached, the bank ought to have changed the FD numbers of the customer. If there were any costs to the customer as a result of it, the bank should have borne them, since it’s the bank (or its officer) which had brought about this situation. It’s failure to secure the FD of the customer, despite repeated requests, constitutes gross negligence. And the bank is liable for the consequences of its action and inaction.