Bulk deposits, an inverted rate card and two customer grievances at Vasudha SFB

Liability. Under RBI's framework for limiting customer liability in unauthorised electronic banking transactions, the starting point is when the customer reported. Reporting within three working days gives zero liability where the fault is a third-party breach with no negligence by either party; reporting between four and seven working days caps the customer's liability at ₹5,000 for a basic savings account and ₹10,000 for other savings or current accounts. This customer reported on day nine, so the residual liability is governed by the bank's board-approved customer-liability policy - but that policy is applied on the facts, and the facts here are bad for the bank.

The burden of proving customer negligence lies on the bank, and the bank never delivered the SMS alerts for any of the nine debits. A customer who is not told about debits as they occur cannot be blamed for taking nine days to notice them. The bank is therefore exposed to the full ₹48,000, and any attempt to debit the customer under the board policy would be difficult to sustain before the RBI Ombudsman.

Immediate steps. (1) Credit the shadow reversal within ten working days of the notification, without waiting for the investigation to end; the customer cannot be kept out of funds during investigation. (2) Do not recover the shadow credit until liability is finally determined, and record that determination in writing. (3) Fix the alerting failure as a separate incident, with root cause and owner. (4) Report the incident in the bank's fraud-monitoring process and preserve the transaction logs and CDRs. (5) Give the customer a written reply within 30 days, with the Ombudsman route stated.

Quantification. Bulk deposits are ₹2,156 crore, 22% of the base. ₹610 crore of that matures in 30 to 91 days, and ₹85 crore within ten days. If the ₹85 crore is not rolled over, the bank must replace it from the retail market - where a one-year deposit at 8.25% with a distribution cost of 40–60 basis points and a two-week mobilisation lag is realistically the only source - or from borrowings.

Three distinct risks.

1. Concentration and rollover risk. Nine co-operative banks and four treasuries are a handful of decision-makers. Co-operative deposits are notoriously sensitive to a single treasurer's view, and as ₹2 crore-plus deposits they are outside DICGC's ₹5 lakh cover, which is exactly why they demand 8.15–8.60%.
2. Pricing risk. The card is inverted: 8.25% for one year against 7.75% for two. The bank is paying a premium for the shortest, most flighty money and penalising the stable two-to-three-year money it needs to fund small-business and microfinance assets of 24–36 months. That inversion signals liquidity strain to the market and compresses net interest margin, since the marginal cost of funds is already 7.9%.
3. ALM consequence. If ₹610 crore must be refinanced within a quarter while loans run for years, the 15–28 day and 29–90 day structural liquidity buckets will show negative gaps that ALCO must be able to explain.

What the board should do. Set board-approved limits: bulk deposits not more than 15% of total deposits, no single counterparty above 3%, and no more than 25% of bulk maturing in any 30-day window. Correct the inversion by lifting the two-to-three-year card rate above the one-year rate and pushing renewal mandates to longer tenors. Build retail CASA through salary and pension mandates rather than price alone. Report bulk maturities weekly to ALCO, with a contingency funding plan naming the backup sources and their costs.

Recoverability. Not recoverable; it is a straight refund. A basic savings deposit account carries no requirement of minimum balance and no charge for the account's ordinary operation, and the bank cannot levy an SMS-alert fee on it. A customer may move to a regular account only with clear consent and notice, and there is no evidence of that here. The bank should reverse ₹212 with interest, write to the customer, and check every other basic savings account at the branch for the same debit - one complaint is almost never one case. The 12 auto-renewal complaints should also be examined together with this: the ₹212 charge and the wrong renewal rate both arise from a branch operating on stale, non-centralised rules.

Systemic fixes the committee should order.

• Centralised rate dissemination: the deposit rate card should be maintained in the core system, with branch override logs reviewed monthly by operations; any renewal at a rate other than the system rate should require documented customer instruction.
• Consent for auto-renewal: capture at account opening, with the default being a maturity instruction the customer has chosen, and confirm the renewal rate to the customer by SMS and email.
• A charge-mapping test in the product master so that basic savings accounts are hard-coded to zero charges rather than left to branch discretion.
• Complaint root-cause reporting to the board quarterly, split by branch and product, with named owners and closure dates.
• A remediation and refund policy for mass-affecting errors: if the review finds a pattern, refund proactively rather than waiting for complaints.
• Display of charges, the grievance escalation matrix and the Ombudsman route at every branch, in the local language.