National consumer commission imposes Rs 15 lakh fine on HSBC for deficiency in services

The National Consumer Disputes Redressal Commission has imposed a fine of Rs 15 lakh on the Hongkong and Shanghai Banking Corporation Ltd (HSBC) for negligence and deficiency in service.

The top consumer commission was hearing a plea filed by complainants claiming their joint savings bank account was “illegally frozen” resulting in ATM withdrawal transactions being declined and dishonour of cheques.

Presiding Member Inder Jit Singh said, “Opposite Party (HSBC) shall pay a compensation of Rs 15 lakh to complainants for the mental agony, harassment and adverse impact on the reputation of complainants on account of dishonour of cheques despite the account having sufficient balance on account of acts of negligence and deficiency in service on the part of the OP.”

The commission also directed HSBC to pay litigation costs of Rs one lakh.

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It noted that the bank had frozen the joint on the grounds of non-renewal of the Know Your Customer (KYC) details of either of the complainants and/or non-deposit of some outstanding amount in one of the two loan accounts, which were settled “much earlier” by the complainants.

The freezing of the joint account resulted in the decline of ATM transactions and subsequent dishonour of cheques despite complainants having sufficient balance in the savings account, the commission said.

It said the bank's act was “unjustified” and “adversely impacted the reputation of the complainants,” besides exposing them to the possibility of criminal action because of the cheques being dishonoured.

The commission also noted that HSBC had reopened the issue of CIBIL Status claiming some outstanding amount in the two loan accounts linked to the joint account.

It, however, noted that according to the records, both the loan accounts stood settled and closed in 2009 and 2010.

“KYC of both complainants was duly updated in accordance with prevailing guidelines as on the date of freezing the savings bank account; OP's action in reopening the issue of CIBIL Status and continuing to keep the said joint account (frozen) were not correct,” the commission said.

It said HSBC's “acts of omission and commission” amounted to “deficiency in service entitling the complainants to compensation for unwarranted humiliation, embarrassment and loss of reputation."

The NCDRC also directed the bank to "defreeze" the account, besides making changes in its records to show the loan accounts as closed, issue the requisite 'No Dues Certificate' and reflect the CIBIL of complainants appropriately.