Mumbai: The National Consumer Commission has directed the Hongkong and Shanghai Banking Corporation Limited to pay Cuffe Parade residents Rs15 lakh compensation for the mental agony and harassment they faced after their accounts were frozen.
The commission directed the de-freezing of the accounts and asked a further Rs1 lakh to be paid as litigation cost.
If the payments are not done in 30 days, it will attract 9% simple interest. The Commission also directed the bank to not demand any further amount to settle / close loan accounts which were cited to de-freeze accounts and issue a 'No Dues Certificate' and reflect the Credit Information Bureau India Limited (CIBIL) of complainants appropriately.
Reasons cited to freeze accounts
Dues in loan accounts and lack of Know Your Customer (KYC) were cited as reasons to freeze the accounts that led to the non-withdrawal of money from ATM and dishonour of cheques issued by the bank. The commission said that the bank did not put records in which they classified complainants as high-risk customers and requested them to update their KYC every 2 years as per Reserve Bank of India (RBI) guidelines. The order dated June 12 was passed on a complaint by Cuffe Parade residents Anil Goyel and another.
The complaint was filed after the complainants could not withdraw money from the ATM in November 2015. They were told that Anil's wife's KYC was not updated and there was an outstanding amount in the loan accounts, which the complainants said they had already cleared. The account continued to be frozen and a cheque issued earlier also bounced. The complainants demanded Rs3.50 crore compensation for the harassment.
Consumer Commission: Bank's action in demanding further amounts not justified
During the hearing, the bank said that despite reminders the KYC was not updated and it was not due to the dues in the loan account. It said that money was demanded after the complainants wanted to change their CIBIL status.
The commission said both the loan accounts stood settled and closed in 2009 and 2010 and that it was not justified in demanding further amounts. It said that the bank failed to place on record any request of complainants to change their CIBIL status which required them to deposit the outstanding amounts in these loan accounts which were written off as claimed by it or settled and closed.
The commission held that the bank had been negligent in its acts of omission and commission and conducted deficiency in service entitling the complainants to compensate for unwarranted humiliation, embarrassment and loss of reputation.
"Freezing the joint savings account of the complainants on the grounds that the KYC of any of the complainants having not been renewed and/or non-deposit of any outstanding amount in any of the two loan accounts, which have since been settled much earlier, which resulted in declining of ATM transaction and subsequent dishonour of cheques despite complainants having balance in the said joint SB A/c, was unjustified and had adversely impacted the reputation of the complainants, and had exposed the complainants to the possibility of criminal action on account of dishonour of cheques," said that commission.
It then went on to give the compensation but said that since the complainants had not placed on record any documents or evidence on the quantum of loss suffered by them, it cannot give them what they had asked for as compensation of Rs3.50 crore.