If you are stuck in such a situation, here is what to do.
A gentleman, Mr. Rohan Sharma, recently found himself in a distressing financial situation. On the 15th of August, 2024, he made a significant purchase of ₹95,500 at a reputed store, ‘Elegant Gems & Jewels’, in the city of Jalandhar. He used his debit card issued by Cosmos Commercial Bank for the transaction. Immediately, he received an SMS notification confirming that the amount had been debited from his account. However, the merchant, ‘Elegant Gems & Jewels’, informed him that the payment had failed and they had not received the funds. To substantiate their claim, they provided Mr. Sharma with an official letter confirming the non-receipt of the payment in their bank account. Caught between his bank, which confirmed the debit, and the merchant, who denied receiving the credit, Mr. Sharma is now facing immense stress and uncertainty about recovering his hard-earned money.
Advice in such cases
When a transaction fails but the amount is debited, it is known as a failed transaction. As per RBI guidelines, there are specific procedures and timelines for banks to resolve such issues. Here is a step-by-step guide:
Immediate Action: The first step is to formally register a complaint with your bank. Do not rely on verbal assurances. File a written complaint through their official portal, email, or by visiting the branch. Obtain a complaint reference or ticket number.
Gather Evidence: Collect all relevant documents, including the SMS alert, the bank account statement showing the debit, the transaction slip from the POS machine (if available), and the written confirmation from the merchant stating non-receipt of funds.
Wait for Auto-Reversal: As per RBI’s Turn Around Time (TAT) framework, the bank should auto-reverse the amount within T+5 days (Transaction date + 5 days). If this does not happen, the bank is liable to pay a penalty of ₹100 per day of delay to you.
Escalate within the Bank: If the issue is not resolved within the stipulated time, escalate the matter to the bank’s Nodal Officer or the Principal Nodal Officer. Their contact details are available on the bank’s website.
RBI Ombudsman: If you do not receive a satisfactory response from the bank within 30 days of filing the initial complaint, you can file a complaint with the Reserve Bank Integrated Ombudsman Scheme (RB-IOS).
Legal Notice: A well-drafted legal notice from an advocate can often expedite the process, as it signals your intent to pursue legal remedies.
Consumer Court: You have the right to file a complaint in the Consumer Disputes Redressal Commission for deficiency in service by the bank.
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 of 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
Applicable Sections of Law
While this is primarily a service-related dispute governed by banking regulations, certain laws provide a strong framework for your rights:
The Consumer Protection Act, 2019: This is your most powerful tool. The bank’s failure to refund the amount for a failed transaction is a clear “deficiency in service.” You can seek not only a refund of the principal amount but also compensation for mental agony and litigation costs.
The Payment and Settlement Systems Act, 2007: This Act empowers the RBI to regulate and supervise payment systems in India. The RBI circulars on Turn Around Time (TAT) for failed transactions are issued under the authority of this Act.
Bharatiya Nyaya Sanhita, 2023 (BNS): In rare cases where it can be proven that the bank or its officials are deliberately withholding your money with dishonest intent, provisions related to criminal breach of trust (Section 316 of BNS) could potentially be invoked. However, this is usually reserved for cases with clear evidence of fraud and not technical glitches.
If you are the complainant
As the person whose money is at stake, you must be proactive and systematic in your approach.
Create a Timeline: Maintain a detailed record of events, including the date of the transaction, the date of your first complaint, and every subsequent communication with the bank.
Communicate in Writing: Ensure every interaction with the bank and the merchant is documented via email or official letters. This creates a paper trail that is crucial evidence.
Follow the Hierarchy: Do not jump steps. Follow the process: Branch -> Nodal Officer -> RBI Ombudsman. This demonstrates that you have given the bank ample opportunity to resolve the issue.
Be Clear in Your Complaint: When filing a complaint with the RBI Ombudsman or the Consumer Court, clearly state the facts, the deficiency in service, and the relief you are seeking (refund, compensation, and costs).
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 of 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
If you are the victim
As a victim of a deficient banking service, the law is on your side. You are not at fault for a technical failure in the banking system.
Know Your Rights: You have a right to a timely resolution. The RBI has mandated specific timelines for this very reason. The bank’s failure to adhere to them makes them liable for penalties.
Do Not Be Intimidated: Bank officials may sometimes offer complex technical explanations or delay the process. Stand firm and demand resolution as per RBI guidelines.
Claim Compensation: You are entitled to compensation for the delay (₹100 per day after T+5 days) and can claim further compensation for the mental harassment and financial strain caused by the incident through the consumer court.
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 of 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
How the police behave in such cases
Generally, the police will not intervene in such matters as they are considered civil disputes, not criminal offenses. If you approach a police station, they will likely advise you to file a complaint with the bank, the RBI Ombudsman, or the Consumer Court. Police involvement would only be warranted if there is a clear element of fraud, cheating (Section 318 of BNS), or a cybercrime, such as your card being used without your authorization. In a case of a failed transaction due to a technical glitch, the police have a limited role.
FAQs people normally have
Here are answers to some common questions in such situations:
Should I escalate to the RBI Ombudsman or wait for the bank?
You must first file a complaint with your bank. If the bank does not resolve the issue or provide a satisfactory reply within 30 days, you should immediately escalate it to the RBI Ombudsman. Do not wait indefinitely.How long does such a POS reversal usually take?
According to RBI rules, the funds should be auto-reversed within T+5 days. If it requires manual intervention and investigation, banks often quote a longer period, but your right to compensation for the delay begins after the 5th day.Is there any risk I won’t get the money back?
The risk of permanently losing your money is very low if you follow the correct procedure. The banking system has clear rules for such disputes, and regulatory bodies like the RBI and judicial bodies like the Consumer Court are in place to protect your interests.
What evidence is required?
Strong documentation is key to winning your case. You must preserve:
Your bank account statement clearly showing the debit of the transaction amount.
The SMS or email alert received from the bank confirming the debit.
The charge slip from the POS transaction, if you have it.
A formal, signed, and stamped letter from the merchant confirming that they did not receive the payment.
Copies of all complaints, emails, and letters exchanged with the bank, along with their complaint reference numbers.
How long will the investigation take?
The bank’s internal investigation can vary. However, the RBI’s auto-reversal timeline is T+5 days. If you complain to the RBI Ombudsman, they typically aim to facilitate a resolution within 30 to 90 days. A case in the Consumer Court can take longer, but it can also result in a more comprehensive order including compensation for mental agony.
Advocate Sudhir Rao, Supreme Court of India