Unauthorised transactions and customer liability
The Reserve Bank of India’s framework on customer liability for unauthorised electronic transactions limits how much a customer has to bear, depending on how quickly the transaction is reported and whether the fault lies with the bank, a third party, or the customer. Reporting the transaction to the bank immediately, and in writing, is the single most important step, because delay can shift liability onto the customer even where the transaction was genuinely fraudulent. Most banks have an internal grievance process for this, and a complaint that gets nowhere there can be escalated to the RBI Integrated Ombudsman Scheme.
Using the Ombudsman before litigation
The RBI Integrated Ombudsman Scheme covers most retail disputes with banks, non-banking financial companies and payment system participants, including wrongful debits, service deficiencies and disputed charges, and it does not require a lawyer’s fee to file. It is generally the sensible first step for an individual customer, both because it is free and because a court or consumer forum will often ask whether this route was tried. It is less suited to disputes between businesses and lenders over larger commercial facilities, where the amounts and the legal questions involved tend to exceed what the scheme is designed to resolve.
Guarantee and mortgage disputes
A guarantor’s liability is defined by the guarantee document and by the general law of contract, and it is not unlimited by default: where a lender materially varies the terms of the underlying loan, for instance by extending the repayment period or increasing the sanctioned amount, without the guarantor’s consent, the guarantor can be discharged to the extent of that variation. Disputes over enforcement of a mortgage, separately, often turn on whether the lender followed the procedure set out in the loan and security documents, and, where SARFAESI applies, the statute’s own notice requirements.
An inaccurate entry with a credit information company, such as a loan wrongly shown as defaulted or not closed after settlement, can affect a person’s ability to borrow for years if not corrected. The first step is a written representation to both the lender that reported the entry and the credit bureau itself, since the bureau is generally required to investigate and correct genuine errors on request. Where this does not resolve matters, a complaint can be taken to the Banking Ombudsman route or, in appropriate cases, a consumer forum or civil court.
