Pune: The Supreme Court's recent ruling, which holds banks fully responsible for fraudulent transactions affecting customer accounts, is a landmark decision that strengthens consumer rights, said Vidyadhar Anaskar, Administrator of the State Government Bank and a banking sector expert.
Reacting to the January 3, 2025 verdict in the case of Pallabh Bhowmik & Others vs. State Bank of India, Anaskar stated that this ruling provides much-needed relief to account holders and sets a strong precedent in India’s banking sector.
According to Anaskar, the Supreme Court has made it clear that banks cannot shift the burden of financial fraud onto customers. Instead, they must take full responsibility for securing funds and ensuring the safety of account holders’ money.
“The judgment reaffirms that protecting customer deposits is not a courtesy but a core duty of banks. It removes any ambiguity about accountability in fraud cases,” Anaskar explained. He emphasized that the court’s reliance on key legal provisions, including the Banking Regulation Act, the RBI Act, and the Consumer Protection Act, 2019, underscores that customers must be fully compensated for financial losses due to fraud.
Anaskar also pointed out that the verdict is a clear message to banks to upgrade their cybersecurity systems and fraud prevention mechanisms. “The Supreme Court has sent a strong warning—banks can no longer afford to be negligent in preventing fraudulent activities. Security lapses will not be tolerated, and institutions must adopt robust fraud detection and prevention strategies,” he said.
He further added that the judgment reinforces public trust in the financial system, ensuring that customers feel secure about their deposits. “This ruling will create a much-needed shift in how banks approach customer security. It is now imperative that they invest in stronger risk management frameworks to safeguard account holders,” he stated.
Anaskar concluded that this ruling is a turning point for the banking sector, as it establishes that financial institutions can no longer evade liability in fraud cases. “Banks are entrusted with people’s hard-earned money, and this verdict ensures that they remain fully accountable. Customers should not bear the consequences of fraud due to institutional negligence,” he asserted.
