SBI Ordered to Refund ₹99,940 Lost in UPI Fraud, Consumer Commission Rules in Customer’s Favour

In a significant ruling aimed at strengthening consumer protection in digital payments, the Chandigarh District Consumer Disputes Redressal Commission has directed the State Bank of India (SBI) to refund an amount of ₹99,940 along with interest to a customer who fell victim to a UPI fraud. The judgment highlights the increasing responsibility placed on banks in cases involving unauthorized online transactions.

The victim, identified as Sanjeev Kumar Sharma, lost the amount in July 2021 after several unauthorized UPI withdrawals were made from his savings account. For months, Sharma approached the bank seeking a refund, but SBI denied responsibility, claiming that UPI transactions are customer-initiated and authenticated. However, the consumer commission rejected this defense and held the bank accountable under RBI guidelines.

How the Fraud Took Place

Sharma maintained a savings account at SBI’s Chandigarh High Court branch. On 21 July 2021, at around 2:30 PM, his phone buzzed with a series of messages notifying him of multiple UPI debits from his account.
The fraudulent withdrawals included:

• ₹25,000

• ₹25,000

• ₹25,000

• ₹24,560

• ₹200

In total, ₹99,940 was siphoned off within minutes.

Realizing he was being defrauded, Sharma immediately contacted the bank, blocked his account, and filed a complaint with the Cyber Crime Cell. Yet, despite timely reporting, he struggled for months to get his money back.

What SBI Said in Its Defense

When Sharma approached SBI for reimbursement, the bank initially assured him that the refund would be processed after verification and approval from the head office. But despite multiple follow-ups, no action was taken.

The bank argued that UPI transactions require the customer’s PIN and authentication. Therefore, in its view, responsibility lay with the account holder. SBI claimed that since the transactions were processed through a secure banking channel, the bank could not be held liable for the loss.

Commission Rejects Bank’s Argument

The consumer commission firmly disagreed with SBI’s stance. In its verdict, the panel referred to the RBI’s circular dated 6 July 2017, which states that in unauthorized electronic transactions, it is the bank’s responsibility to prove customer negligence—not the other way around.

The commission also cited previous rulings of the National Consumer Disputes Redressal Commission (NCDRC) and the Bombay High Court, which consistently hold that in cases involving third-party breaches, banks cannot simply shift the blame to customers without solid evidence.

Since SBI failed to establish any negligence or involvement on Sharma’s part, the commission concluded that the bank acted unfairly by refusing to compensate the victim.

The Final Order

The Chandigarh Consumer Commission issued a clear directive:

• SBI must refund ₹99,940 to the customer.

• The refunded amount must include 9% annual interest, calculated from the date of the fraudulent transaction.

• The bank must comply promptly to avoid additional penalties.

This ruling is expected to set an important precedent for similar cases where banks reject refund claims by citing customer error without proper investigation.

Why This Decision Matters

The case reflects a growing concern surrounding UPI-based frauds in India, where cybercriminals are increasingly exploiting digital payment platforms. Many victims face resistance from banks during complaint resolution, even when fraud is clearly unauthorized.

The commission’s ruling reinforces that:

• Banks must follow RBI’s consumer-friendly norms.

• Customers cannot be penalized for security breaches beyond their control.

• Timely reporting of fraud significantly strengthens a victim’s case.

For millions of UPI users, this decision serves as reassurance that consumer rights remain protected—even in fast-evolving digital systems.