Kasaragod: The District Consumer Disputes Redressal Commission, Kasaragod, has directed South Indian Bank to pay ₹10,000 in compensation and ₹5,000 towards litigation costs for deducting ₹590 from his account for not maintaining the minimum balance.

The commission said the bank’s actions amounted to “deficiency in service”, particularly because it did not inform the customer or give him a chance to maintain the minimum balance before deducting the fine.

The case involved an unusual sequence of deductions. On November 22, 2022, Raju Stephen D'Souza (50), who runs a hardware shop in Kumbla, opened a current account with South Indian Bank’s Seethangoli branch with the required minimum balance of ₹5,000. “After that, I did not carry out any transaction in the account,” said D’Souza. But the bank deducted ₹2 as an SMS charge. This brought the balance down to ₹4,998, ₹2 below the required minimum.

The bank then deducted ₹295 from the account on January 1, 2023, and another ₹295 on February 1, 2023, as charges for not maintaining the minimum balance. D’Souza came to know of the monthly deductions only in February and approached the bank. “The manager told me the deductions were automated and that he could not intervene,” he said. “That was unacceptable. The bank can hold me accountable if I had spent the money. Here, the bank deducted ₹2 from my account without my knowledge and is now fining me for not maintaining the required balance. This is nothing short of loot,” he told Onmanorama.

On February 23, 2023, D'Souza approached the consumer commission, arguing that the deductions were illegal and amounted to deficiency in service. He said the bank had neither informed him that the account required a minimum balance of ₹5,000 nor given him an opportunity to deposit the ₹2 shortfall before imposing the charges.

The bank contended that the deductions were automated and made in accordance with its schedule of service charges and banking practice. It also argued that the current account was a commercial account and that D'Souza was bound by the terms and conditions of the account.

The commission, however, held that the bank had failed to establish that D'Souza had given informed consent to the minimum-balance penalty or that the requirement had been properly disclosed to him.

It also noted that the bank had not issued a prior notice informing him of the shortfall or given him an opportunity to restore the balance before imposing the charges. The commission, headed by its president Krishnan K, observed that the bank had deducted the SMS charge itself, causing the balance to fall below the minimum requirement, and subsequently imposed penalties without giving the customer an opportunity to correct the shortfall.

The commission said banks could prescribe minimum-balance requirements, but customers had to be clearly informed of such requirements. It also stressed the importance of transparency, prior notice, contractual consent and fairness in banking services.

The bank produced the schedule of charges, but it was not signed by anyone, it said. "Since the bank is not able to prove customer consent or proper disclosure, the deductions are treated as deficiency in service and unfair," the commission’s order said.

It held that “sudden deductions” without notice or an opportunity to maintain the minimum balance amounted to deficiency in service. The commission also rejected the bank's argument that the deductions were automated and policy-based. 

D’Souza said he has maintained a current account with Canara Bank for 30 years but opened an account with South Indian Bank after being told that its services were better. The consumer commission has ordered SIB to pay him ₹15,590 within 30 days of receiving the order.

The order was passed by commission president Krishnan and member Beena K G.  “After the verdict, several people who know me called to say they, too, had faced similar deductions by their banks. All customers should approach consumer courts if banks deduct money without informing them,” D'Souza said after his three-and-a-half-year legal battle.