HC tells BoB to refund ₹1.24 crore in SIM-swap fraud, affirms ‘zero liability’ for customer

The court dismissed the bank’s defence that its security protocols were followed, calling it a 'lame excuse' as such systems can fail when a SIM is fraudulently replaced. It referred to a similar ruling involving HDFC Bank, indicating banks cannot avoid liability when customers do not receive transaction alerts due to SIM swaps.

A bench of Justices Bharati Dangre and Manjusha Deshpande directed Bank of Baroda to refund ₹1.24 crore to PNP Polytex Pvt Ltd, holding that the customer had zero liability as the fraud was carried out by third parties and reported immediately. The court noted RBI’s 2017 circular and ordered the bank to credit the amount after adjusting the frozen sum, with 6% interest from the date of complaint and within eight weeks.

PNP Polytex Pvt Ltd, a Mumbai-based firm, suffered ₹1.24 crore in unauthorised online transactions in January 2020. The company informed the bank immediately and sought a freeze on its accounts. Bank of Baroda blocked ₹47.8 lakh, but the remaining amount had already been withdrawn by the fraudsters. A complaint was registered at the Borivali police station. Following the investigation, it was confirmed that third parties breached banking credentials and diverted OTPs to execute the fraud.

The RBI issued a circular on unauthorised electronic banking transactions on July 6, 2017, stating customers are entitled to zero liability if they report such fraud within three days.