The Karnataka High Court has directed Bharat Sanchar Nigam Limited (BSNL) to pay a compensation of Rs 50.5 lakh to a co-operative bank that fell victim to a SIM swap fraud. The incident occurred on February 7, 2019, when an unauthorized transfer of Rs 87,70,000 was made from the bank's current account through RTGS and NEFT transactions. Of this amount, Rs 30 lakh was later reversed and credited back to the bank's account.
Background of the Case
The co-operative bank had filed a petition alleging that the fraud was made possible due to a SIM swap executed without proper verification by BSNL. The bank argued that the telecom service provider's negligence in authenticating the SIM swap request enabled fraudsters to gain access to the bank's mobile banking credentials and carry out the unauthorized transactions.
Court's Observations
Justice M. Nagaprasanna, presiding over the case, noted that BSNL failed to adhere to the mandatory verification protocols prescribed by the Department of Telecommunications. The court observed that the telecom operator did not verify the identity of the person requesting the SIM swap adequately, which constituted a clear dereliction of duty. The judgment emphasized that telecom companies have a responsibility to safeguard their customers from such fraudulent activities.
Compensation Details
The court ordered BSNL to pay Rs 50.5 lakh as compensation to the bank, which includes the net loss of Rs 57.7 lakh (after accounting for the reversed amount) plus interest. The compensation is intended to cover the financial loss suffered by the bank due to the fraud. The court also directed BSNL to take corrective measures to prevent such incidents in the future.
Implications for Telecom Operators
This ruling underscores the liability of telecom service providers in cases of SIM swap fraud. It serves as a reminder that telecom companies must implement robust verification processes to prevent unauthorized SIM swaps. The judgment is expected to have broader implications for the telecom industry, prompting operators to strengthen their security protocols.
Reactions and Next Steps
The co-operative bank's legal representatives welcomed the verdict, stating that it sets a precedent for holding telecom companies accountable for negligence. BSNL has not yet announced whether it will appeal the decision. The case highlights the growing threat of SIM swap fraud in the digital age and the need for stricter regulatory oversight.
