National consumer commission imposes Rs 15 lakh fine on HSBC for negligence

The National Consumer Dispute Handling Commission has fined Hong Kong and Shanghai Banking Corporation (HSBC) Rs 15,000 for negligence and lack of service.

The highest consumer committee was hearing a petition by the complainants alleging that their combined savings bank account was unlawfully frozen resulting in ATM withdrawals being refused and checks being insulted.

Chairing member Inder Jit Singh said the opposite party (HSBC) should pay compensation of Rs 15,000 to the complainants for mental suffering, harassment and negative impact on the complainants’ reputation due to non-honoring of checks despite having sufficient balance in the account. Acts of negligence and lack of service on the part of the Optional Protocol.

The committee also directed HSBC to pay litigation costs in the amount of Rs 1,000.

He pointed out that the bank had frozen the joint account on the basis of not renewing Know Your Customer (KYC) details of any of the complainants and/or not depositing some of the outstanding amounts in one of the two loan accounts, which had been settled much earlier by the complainants.

The authority said that the freezing of the joint account led to a decline in ATM transactions and the subsequent insult to checks despite the complainants having sufficient balance in the savings account.

She said that the bank’s action was unjustified and negatively affected the reputation of the complainants, in addition to exposing them to the possibility of filing a criminal case due to insulting the checks.

The Committee also noted that HSBC had reopened the CIBIL situation claiming some outstanding amounts in the two loan accounts linked to the joint account.

However, it noted that according to records, loan accounts were cleared and closed in 2009 and 2010.

The KYC of both Complainants has been duly updated in accordance with the prevailing guidelines as of the date the Bank Savings Account was frozen; The Commission said that the OP’s action in reopening the CIBIL status case and continuing to maintain said joint account (frozen) was incorrect.

It said HSBC’s negligent acts and kickbacks amounted to a lack of service that entitles complainants to compensation for gratuitous humiliation, embarrassment and loss of reputation.

The NCDRC also directed the bank to “unfreeze” the account, as well as make changes to its records to show the loan accounts as closed, issue the required “Certificate of Non-Payment” and reflect the CIBIL to the complainants appropriately.