Supreme Court Ruling Escalates Banking Due Diligence Responsibilities
The Supreme Court upheld a ruling against Canara Bank for failing to present cheques within their validity period, highlighting banks' responsibility to act with due diligence as agents of their customers. The bank's failure constituted negligence in service, resulting in adjusted compensation for the affected customers.
- Country:
- India
The Supreme Court emphasized banks' responsibility to act with due diligence as agents of their customers, saying that negligence in this duty constitutes a deficiency in service. This verdict against Canara Bank highlights legal expectations from financial institutions.
A bench comprising Justices B V Nagarathna and Ujjal Bhuyan reduced compensation awarded to customers after the bank failed to present cheques within their validity period. The court maintained that such negligence breached consumer protection laws.
The case stemmed from Canara Bank's failure to process cheques deposited by customers Kavita and Priya Chowdhary. Despite acknowledging a work strike, the court noted the bank’s failure to act on the next working days, stressing the importance of due diligence in financial operations.
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