SBI Ordered To Pay Compensation After Sharing Customer's Bank Details Without Consent
A district consumer commission in Uttar Pradesh has held the State Bank of India ( SBI ) responsible for deficiency in service after it shared a customer's personal savings account details with his former employer without obtaining his consent.
The commission observed that banks are expected to maintain strict confidentiality regarding customer information and cannot disclose personal banking details to third parties without proper authorisation. The ruling comes as an important reminder of the responsibility financial institutions have in protecting customer privacy.
The case arose from a complaint filed by a former employee who alleged that his personal bank account information had been disclosed during an ongoing legal dispute with his previous employer.
According to his complaint, while a labour dispute involving his former employer was pending before the Allahabad High Court's Lucknow Bench, the employer submitted an affidavit containing the statement of his personal savings account.
Shukla claimed he had never authorised the bank to share the details of this account. He argued that the disclosure caused him mental distress and amounted to a breach of his privacy.
He also pointed out that the account statement contained incorrect entries, which the bank later acknowledged and rectified.
Subsequently, another SBI branch confirmed in its written reply that the account statement had indeed been shared with the former employer following its request.
The bank defended its decision by stating that the employer maintained its salary account with SBI and had sought the statement to reconcile wage records. It also argued that the employer should have been included as a party in the consumer complaint because the labour dispute was still pending before the court.
It observed that the disputed account was a personal savings account and was entirely separate from the salary account through which the complainant had received his wages during his employment.
The commission noted that there was no issue regarding the salary account. Instead, the dispute centred solely on the personal savings account, which had no connection with the employer's financial records.
Since the account was personal in nature, the commission held that sharing its details without the account holder's consent violated established banking rules and amounted to poor service.
The commission concluded that both the Hargaon branch and the main SBI branch involved in the matter failed to uphold these obligations by sharing private banking information with a third party without obtaining prior permission.
At the same time, two senior SBI officials named in the complaint were relieved of liability after the commission found they had no direct involvement in the disclosure.
The order also provides for 6% annual interest on the compensation amount, calculated from 26 July 2022, the date on which the complaint was filed, until the payment is made.
In addition, the bank has been directed to pay ₹5,000 towards litigation expenses incurred by the complainant.
The commission further stated that if the compensation is not paid within the prescribed period, the complainant will be entitled to initiate legal proceedings to enforce the order.
Even where employers, organisations or third parties seek banking records, disclosure of a customer's Savings Account details requires appropriate legal authority or the customer's consent unless specific legal exceptions apply.
The ruling is likely to strengthen awareness among bank customers about their privacy rights while encouraging financial institutions to ensure stricter compliance with banking regulations governing confidential customer information.
The commission observed that banks are expected to maintain strict confidentiality regarding customer information and cannot disclose personal banking details to third parties without proper authorisation. The ruling comes as an important reminder of the responsibility financial institutions have in protecting customer privacy.
The case arose from a complaint filed by a former employee who alleged that his personal bank account information had been disclosed during an ongoing legal dispute with his previous employer.
Dispute Began During Ongoing Labour Case
The complainant, Pankaj Kumar Shukla, had earlier worked for a sugar mill and maintained a personal savings account at SBI's Hargaon branch in Sitapur district.According to his complaint, while a labour dispute involving his former employer was pending before the Allahabad High Court's Lucknow Bench, the employer submitted an affidavit containing the statement of his personal savings account.
Shukla claimed he had never authorised the bank to share the details of this account. He argued that the disclosure caused him mental distress and amounted to a breach of his privacy.
He also pointed out that the account statement contained incorrect entries, which the bank later acknowledged and rectified.
Bank Admitted Sharing The Account Statement
After seeking an explanation from the bank, Shukla alleged that the local branch failed to provide a satisfactory response.Subsequently, another SBI branch confirmed in its written reply that the account statement had indeed been shared with the former employer following its request.
The bank defended its decision by stating that the employer maintained its salary account with SBI and had sought the statement to reconcile wage records. It also argued that the employer should have been included as a party in the consumer complaint because the labour dispute was still pending before the court.
Commission Finds Violation Of Banking Rules
The Consumer Commission, however, rejected the bank's justification.It observed that the disputed account was a personal savings account and was entirely separate from the salary account through which the complainant had received his wages during his employment.
The commission noted that there was no issue regarding the salary account. Instead, the dispute centred solely on the personal savings account, which had no connection with the employer's financial records.
Since the account was personal in nature, the commission held that sharing its details without the account holder's consent violated established banking rules and amounted to poor service.
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Customer Privacy Must Be Protected
The order highlighted that banks have a duty to safeguard confidential customer information unless disclosure is permitted by law or authorised by the customer.The commission concluded that both the Hargaon branch and the main SBI branch involved in the matter failed to uphold these obligations by sharing private banking information with a third party without obtaining prior permission.
At the same time, two senior SBI officials named in the complaint were relieved of liability after the commission found they had no direct involvement in the disclosure.
Compensation Awarded To The Customer
As part of its decision, the commission directed the two SBI branches to jointly pay ₹20,000 as compensation for the mental stress caused to the complainant.The order also provides for 6% annual interest on the compensation amount, calculated from 26 July 2022, the date on which the complaint was filed, until the payment is made.
In addition, the bank has been directed to pay ₹5,000 towards litigation expenses incurred by the complainant.
The commission further stated that if the compensation is not paid within the prescribed period, the complainant will be entitled to initiate legal proceedings to enforce the order.
Why The Ruling Matters
The decision reinforces the importance of Bank Customer Privacy and serves as a reminder that financial institutions must exercise extreme caution while handling customer information.Even where employers, organisations or third parties seek banking records, disclosure of a customer's Savings Account details requires appropriate legal authority or the customer's consent unless specific legal exceptions apply.
The ruling is likely to strengthen awareness among bank customers about their privacy rights while encouraging financial institutions to ensure stricter compliance with banking regulations governing confidential customer information.
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