Bank Fraud: Are You Eligible For A Refund If Bank Officer Defrauds You? Check This Recent Case!

In the recent times, there have been different occasions when there have reports of bank branch managers and their accomplices absconding with the depositors' funds held at the bank.

Many of these cases take place as the ones committing the fraud are bank employees and they are committing this fraud against both the customers and the bank itself.

Are Banks Liable For Frauds Done By Their Employees?

In a recent case in April 2024, the Supreme Court of India upheld a bank's liability for the acts of its employees in a case where the employee fraudulently withheld the amount from depositing in the customer's FD account.

Additionally, according to the central bank's Master Direction on Fraud - Classification  and Reporting, banks must take up the matter with the concerned authorities like CBI or the police in case a customer raises a complaint of fraud allegedly perpetrated by the bank's employees.

Bank Of Baroda Returns Money With 6% Interest

In a recent case of fraud, an officer at the major public sector bank - the Bank of Baroda, had cleared 47 cheques with forged signatures to be encashed.

Out of these, 32 cheques were paid to third parties, making it extremely challenging to recover the money and the remaining 15 were account payee cheques and so the money could be recovered.

While this fraud went unnoticed for three whole months, due to this many customers of the bank suffered huge financial losses and ended up filing complaints with the bank first and then the court.

In this situation, the bank claimed that all the necessary procedures and formalities for processing a cheque were followed and claimed they were not liable for the losses incurred by the customers.

However, the Kerala High Court rejected this argument of the bank to give full refund to the affected consumers with about 6% per annum interest.

What Was The Case?

Originally, the case was filed against Vijaya Bank but post merger the Bank of Baroda fought the case.

According to the Vigilance Department officer who investigated the case, the signatures on the cheques in question, which were claimed to be from the authorised signatories of customers, varied from the specimen signatures held by the bank.

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