No Action from Bank on Mistyped Account Number causing Loss of Funds, Senior Citizen gets Refund, Compensation Order from Consumer Forum
The original payment of Rs 52,659 had already been debited from his account and had gone astray
What began as a routine health insurance premium payment ended in a two-year legal struggle for 69-year-old Vanga Krishna Reddy, a resident of Peerzadiguda, Hyderabad. A minor typographical error while transferring Rs 52,659 online in June 2023 sent the amount to the wrong account, triggering a prolonged dispute involving two major banks and an insurance company. Ultimately, the...
What began as a routine health insurance premium payment ended in a two-year legal struggle for 69-year-old Vanga Krishna Reddy, a resident of Peerzadiguda, Hyderabad. A minor typographical error while transferring Rs 52,659 online in June 2023 sent the amount to the wrong account, triggering a prolonged dispute involving two major banks and an insurance company.
Ultimately, the matter reached the Ranga Reddy District Consumer Disputes Redressal Commission, which recently ruled in favour of the complainant.
The case began in June 2023, just three days before the due date for Krishna Reddy’s health insurance policy renewal. Attempting to make a payment through his bank’s mobile app, he inadvertently mistyped a single digit in the beneficiary account number. Although the transaction was marked as “successful,” the amount never reached the insurance company, and no policy renewal confirmation was received.
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Realising the error promptly, Reddy made a second payment with the correct details to ensure his insurance cover remained uninterrupted. However, the original payment of Rs 52,659 had already been debited from his account and had gone astray.
Krishna Reddy immediately contacted his bank to report the issue. The bank acknowledged the mistake and assured him that it would be looked into. It subsequently raised a chargeback request with the recipient bank in an attempt to retrieve the funds.
However, the process stalled when the receiving bank replied that the "customer cannot be contacted for obtaining debit confirmation." This effectively froze the recovery process, with neither bank taking responsibility or showing urgency to resolve the issue.
The first bank said they’d investigate it, but after the initial acknowledgement, there was complete silence, said Krishna Reddy, recounting his frustration with the inaction and lack of follow-up.
With no resolution in sight, Krishna Reddy filed a complaint in the Ranga Reddy District Consumer Disputes Redressal Commission in May 2024, nearly a year after the incident.
During the hearings, his bank defended its stance, claiming it had merely executed the customer’s instructions and never received the funds. The second bank failed to appear before the commission and was declared ex-parte. The insurance company, having not received the erroneous payment, was not a party to the dispute.
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In its judgment, the Commission came down heavily on both banks. It held that while the mistake in inputting the account number originated from the customer, the banks had a duty of care to verify mismatches between the account number and the beneficiary name — a basic safety check widely expected from banking institutions.
The court found both banks guilty of deficiency in service. It observed that they failed to take timely and reasonable steps to resolve the issue, despite being alerted promptly. The banks’ apathy, the court noted, had led to unnecessary financial hardship and mental distress for the complainant.
In a strong message underscoring the banks' accountability in digital transactions, the Commission ordered both banks to jointly refund the full amount of Rs 52,659 to Krishna Reddy. Additionally, the court directed that the amount be paid with an annual interest of 10% from the date of the transaction until the refund date.
Furthermore, each bank was ordered to pay Rs 10,000 — one towards compensation for mental agony and another Rs 10,000 towards legal costs incurred by the complainant.
With more consumers relying on mobile and internet banking, errors like this are not uncommon. However, the court’s ruling reinforces that banks cannot shrug off their duty to safeguard customers from the consequences of inadvertent mistakes.
Under RBI’s guidelines, while customers are expected to enter correct details, banks are also advised to implement systems that flag inconsistencies between account names and numbers, particularly in high-value transactions.
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The ruling by the Ranga Reddy Consumer Commission offers relief to Krishna Reddy after nearly two years of bureaucratic limbo and legal struggle. More importantly, it sets a precedent emphasizing the shared responsibility between consumers and banks in digital financial transactions.
As digital payments continue to dominate India’s banking landscape, the case calls for better safeguards, enhanced verification mechanisms, and a more proactive approach from banks to prevent and resolve such incidents swiftly.
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