One of my clients recently had a case which I am explaining below and if you are stuck in such similar situation, here is what to do.
Note: Due to attorney-client privilege, I cannot disclose complete case details or identify the actual parties involved. However, I am sharing the essential facts and legal approach so that if you find yourself in a similar situation, you can understand the available solutions and legal remedies.
TL;DR: Banks cannot silently stack up Minimum Average Balance charges for years without notifying you, and they cannot levy such charges once an account becomes inoperative or dormant under RBI rules. You can get a full refund if you escalate to the Banking Ombudsman with the right circular references and documentation.
Rohan Sharma's salary account with Punjab National Bank in Lucknow lay unused from mid-2020. Not a single transaction. No SMS. No email. By all accounts, it was dead in the water. In April 2024, his employer linked it for salary credits. Fresh funds landed. Within hours, ₹4,100 vanished.
The bank had attached a silent lien. No notice beforehand. No courtesy call. They simply took every rupee of quarters-old Minimum Average Balance charges stacked up over three years—right under the radar. Rohan first approached the branch. The manager shrugged and said the system calculated it automatically. No refund.
He then approached the Chamber of Advocate Sudhir Rao after a local lawyer’s generic complaint letter got no response. Here’s where things turned. Advocate Sudhir Rao and his office immediately identified multiple RBI violations: no prior alert before debiting charges, failure to classify the account as dormant after two years of inactivity, and the silent lien itself. They crafted a precise complaint to the Banking Ombudsman citing specific RBI circulars. Within weeks, the bank reversed the entire debit. No half measures. Full refund with a meek apology.
Make no mistake, this wasn't luck. It was precision. Advocate Sudhir Rao's experience in banking regulatory disputes made the difference, mapping each transgression to a binding RBI directive. A general practitioner might have missed the dormant-account exemption entirely, focusing only on ‘no notification’. That would have left money on the table.
Key Facts of the Case
- Account opened at Punjab National Bank, Lucknow; remained unused from July 2020 to March 2024.
- Zero customer-initiated transactions for over 24 months—triggering mandatory dormant/inoperative classification under RBI rules.
- Bank never marked the account as dormant; continued to levy quarterly MAB charges silently.
- No SMS or email alerts were sent at any point about low balance or pending charges.
- In April 2024, the account was converted to a zero-balance salary account; first salary credit came in May 2024.
- Within hours of the credit, the bank debited ₹4,100 via silent lien, wiping out the balance.
- Branch refused refund, claiming system-generated charges were valid.
- After Advocate Sudhir Rao’s office filed a detailed Banking Ombudsman complaint citing RBI Master Circulars, the bank refunded the full amount.
The Direct Legal Answer
Can the bank deduct MAB charges without any prior notice?
No. RBI guidelines on levy of penal charges require banks to notify customers before debiting non-maintenance charges. A silent lien that retrospectively sweeps funds without a single alert violates fair practices code and the RBI circular on reasonableness of charges. You have every right to seek a refund.
Is the bank allowed to charge MAB on a dormant or inoperative account?
Absolutely not. RBI’s Master Circular on Customer Service states that banks must not levy any charges—including MAB penalties—once an account becomes inoperative. And here’s the thing: an account with no transactions for over two years must be classified as inoperative. If the bank failed to do so and kept charging, the blame lands squarely on them.
What if the bank claims the charges were system-generated and auto-applied?
That argument holds no weight. Banks are responsible for their systems. If their software failed to mark the account dormant and silently stacked charges, they cannot pass on the consequence to you. RBI ombudsman decisions have repeatedly penalized such automated overreach.
Advice in Such Cases
Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation to come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.
Before you rush to the ombudsman, gather every tiny piece of evidence—bank statements, email communications, SMS logs. Approach the bank’s grievance redressal officer first. That step is mandatory before ombudsman escalation. But if you get a bland rejection, don’t sit on it. Move quickly.
Engage an advocate who regularly handles banking complaints. The distinction between “no notice” and “dormant account exemption” is a nuance that often escapes a general practitioner. That distinction alone can decide whether you recover ₹4,100 or nothing at all.
Applicable Sections of Law
This isn’t a criminal dispute, so BNS/BNSS don’t apply. The matter falls under consumer protection and banking regulation law:
- Consumer Protection Act, 2019 – Sections 2(42) (unfair trade practice) and 2(47) (deficiency in service).
- RBI Master Circular on Customer Service in Banks (latest version) – Specifically the chapter on levy of service charges, which caps penalties and requires prior notice.
- RBI Circular on Inoperative/Dormant Accounts – Directs banks not to levy any charges once an account becomes inoperative.
- Banking Ombudsman Scheme, 2006 (as amended) – Clause dealing with deficiency in service, specifically covering non-observance of RBI directions on charges.
Jurisdiction — Where to File the Case
You can lodge a complaint with the Banking Ombudsman having jurisdiction over the bank’s branch where your account is maintained. That’s usually the city where you opened the account or its servicing branch. If the ombudsman’s order goes against you, you can appeal to the Appellate Authority within 30 days. You’re free to also approach the Consumer Forum directly—territorial jurisdiction lies where the bank branch is located or where you reside. The pecuniary value of ₹4,100 would place it before the District Consumer Disputes Redressal Commission. Choose the forum based on speed; the ombudsman is typically faster for straightforward banking violations.
Limitation Period
Under the Limitation Act, 1963, a suit for recovery of money must be filed within three years from when the cause of action arises. Here, the cause of action arose the moment the bank debited the ₹4,100 without notice—May 2024. For a consumer complaint, the limitation is two years from the date of cause of action. So if you’re reading this in early 2026, you’re still well within time. But don’t delay. Each passing month makes evidence harder to collate.
Interim Reliefs Available
While your ombudsman complaint is pending, you can request interim directions to prevent the bank from imposing any further charges or closing the account. The ombudsman has the power to pass interim orders to preserve the status quo. In a consumer forum, you’d seek an injunction under Order 39 Rule 1 & 2 CPC to stop the bank from appropriating any more funds from the same account until final disposal. Getting this early can prevent additional financial harassment. And it sends a strong signal to the bank that you’re serious.
If You Are the Victim
- Raise a written grievance with the bank’s branch manager and nodal officer immediately.
- Collect your three-year bank statement and highlight the zero-transaction period.
- File a formal complaint with the bank’s internal ombudsman or principal nodal officer.
- If unsatisfied, escalate to the RBI Banking Ombudsman with all evidence and circular citations.
- Do not close or convert the account until the dispute is fully resolved.
Documents You Must Keep Ready
- Aadhaar card and PAN card for identity verification.
- Complete bank statements from July 2020 to the date of debit.
- Any email or SMS records from the bank during the dormant period.
- Salary conversion letter or employer’s letter linking the account.
- Copy of the grievance complaint lodged with the bank and their response.
- Photos or screenshots of the mobile banking app showing the sudden debit.
- Printouts of RBI circular references on dormant accounts and prior notice requirements.
What Evidence Is Required?
- Bank statements proving no customer-initiated transactions for over two years—primary evidence.
- Electronic records of SMS/email logs from your phone to show no alerts received.
- Written communication with the bank capturing their refusal to refund.
- Salary credit entry and the immediate debit entry showing the silent lien.
- Affidavit stating you never received any notification about the charges.
- RBI circulars as supporting legal documents—admissible as secondary evidence.
- Any voice recording or messages where bank officials admit system error (with proper certification).
How Courts Typically Approach Such Cases
Banking ombudsmen and consumer forums consistently frown upon silent deductions and dormant-account MAB penalties. They see these as deficiency in service and unfair trade practice. The moment you show that the bank didn’t send a single alert for three years and kept charging fees, the burden shifts to the bank to prove they followed due process. Courts often award full refunds along with compensation for mental harassment and litigation costs. The absence of proper notice is treated as a serious breach of good faith.
Timeline of Legal Process
- Internal grievance: 30 days as per RBI mandate for resolution.
- Banking Ombudsman complaint: Typically resolved within 60 to 90 days from filing.
- Consumer forum: Filing to admission: 1–2 months; written statement by opposite party: 30–45 days; evidence and arguments: 6–9 months; final order: 3–6 months after that. So overall 12–18 months for a contested matter.
- Appeal: State Consumer Disputes Redressal Commission—another 6–12 months.
- Execution: If the bank refuses to comply, a month or two more for coercive steps.
Understanding the Costs
The total cost of a matter like this varies significantly from one case to the next — it depends on the complexity of the dispute, the forum involved, the number of hearings, and the specific facts of your situation. There is no single fixed figure that applies to everyone.
A professional advocate can give you an accurate estimate only after reviewing all your facts and documents in a consultation.
Can the Matter Be Settled Out of Court?
Yes, and it often is. Most banks prefer to settle once they realise you’ve cited the right RBI circulars and have a strong ombudsman complaint. You can negotiate directly through your advocate before the ombudsman issues a formal order. If the matter reaches consumer forum, a compromise under Section 89 CPC and Order 23 Rule 3 CPC can be recorded. Lok Adalats also accept such pre-litigation disputes. Settlement saves time and legal costs—but don’t accept anything less than a full refund unless the bank has a genuine partial defence (rare in silent lien cases).
Common Mistakes People Make
- Delaying action for months, thinking the bank will auto-correct the mistake.
- Closing the account in frustration—you lose access to the transaction trail needed for evidence.
- Approaching an advocate who doesn’t regularly handle banking disputes, leading to generic notices that the bank ignores.
- Not citing specific RBI circular numbers in the complaint, which weakens the legal punch.
- Verbally arguing with branch staff instead of creating a formal paper trail.
- Accepting a partial refund as “goodwill” without realising the full amount is legally owed.
FAQs People Normally Have
Are there specific RBI circular numbers I can cite?
Yes, refer to the RBI Master Circular on Customer Service in Banks (latest revision) for provisions against levying charges without notice and the Master Circular on Inoperative Accounts which prohibits charges on dormant accounts. The exact circular numbers update periodically, so check the current consolidated circulars on the RBI website. Your advocate will have the precise references.
Will the Banking Ombudsman really order a refund for back-dated MAB charges?
Yes, if the bank violated the notification and dormant account rules. Numerous ombudsman awards have directed full refunds with compensation. The key is to present a clear timeline showing zero transactions and absence of any alerts.
Do I need a lawyer for the Ombudsman complaint?
Not mandatory—you can file yourself, but a lawyer who knows the relevant RBI circulars and how to draft a legally airtight complaint can dramatically increase your chances of a swift, favorable outcome.
What if the account wasn’t marked dormant but had no transactions for two years?
The bank’s failure to mark it dormant is their fault, not yours. RBI guidelines say an account must be treated as inoperative after two years of no customer-induced transactions. You can argue that the bank cannot profit from its own non-compliance.
Can the bank ruin my credit score for these charges?
Typically no. A lien for MAB charges on a savings account doesn’t get reported to credit bureaus as a default. But if the account goes into negative and the bank reports it as a written-off amount, there could be a reporting. Dispute it immediately with the ombudsman if that happens.
This article is general legal information, not legal advice. Consult a qualified advocate about your specific situation.
Advocate Sudhir Rao, Supreme Court of India