• Landmark Ruling Reinforces Banks’ Responsibility for Customer Protection
• Yes Bank Ordered to Compensate Wardha Nagari Sahakari Bank
Unmesh Gujarathi
Sprouts News Exclusive
In a major victory for financial accountability, Maharashtra’s adjudicating officer and principal secretary of the Department of Information Technology, Parrag Jaiin Nainutia, has directed Yes Bank to reimburse ₹1.21 crore to Wardha Nagari Sahakari Adhikosh Bank. This order follows a massive cyber fraud incident where the cooperative bank suffered unauthorized transactions. Additionally, Yes Bank has been instructed to pay ₹29.83 lakh in compensation for damages, including loss of reputation, public trust, and litigation expenses.
According to a detailed report by Sprouts News, the fraud occurred on May 24, 2023, when Wardha Nagari Sahakari Bank detected unauthorized Real-Time Gross Settlement (RTGS) transactions amounting to ₹1.21 crore from its Yes Bank account in Nagpur. Investigations revealed that 24 fraudulent transactions were processed without proper authorization. Notably, at the time of the breach, the cooperative bank’s systems were non-operational, raising concerns about how unauthorized access was gained.
Immediately after the breach, Wardha Nagari Sahakari Bank halted all transactions with Yes Bank and filed a complaint with the Wardha police cyber cell. However, Sprouts News has learned that Yes Bank delayed providing recipient details, making fund recovery difficult. The adjudicating officer’s ruling cited severe security lapses on Yes Bank’s part, including the lack of IP binding, weak two-factor authentication (2FA), and inadequate fraud detection mechanisms—all violations under Section 43A of the Information Technology Act, 2000.
Prominent cyber law expert and advocate Dr. Mahendra Limaye, representing Wardha Nagari Sahakari Bank, argued that Yes Bank’s failure to implement robust cybersecurity measures led to this significant financial loss. In response, Mr. Nainutia emphasized the need for real-time monitoring and strong security systems, especially for banks handling RTGS transactions.
As per information obtained by Sprouts News, Yes Bank has been ordered to reimburse ₹1.21 crore with 18% compound interest from the date of the breach until full payment. An additional ₹29.83 lakh must be paid for reputational loss, mental distress, and litigation costs. Yes Bank has one month to comply with the ruling.
This case sets a strong precedent in India’s banking and cybersecurity landscape, reinforcing financial institutions’ responsibility to maintain strict security measures to protect customer transactions and data.
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Controversy of Wardha Nagari Sahakari Bank
• Wardha Nagari Sahakari Bank has been embroiled in several controversies over the years, raising concerns about its financial management and governance. While the recent cyber fraud case involving Yes Bank has put the cooperative bank in the spotlight, past incidents suggest deeper structural and operational issues.
• One of the major controversies surrounding the bank has been allegations of financial mismanagement and irregularities in loan disbursements. Reports indicate that the bank has faced scrutiny for granting loans without proper due diligence, leading to a rise in non-performing assets (NPAs). Such practices have weakened the bank’s financial stability and raised red flags among regulatory authorities.
• Additionally, there have been accusations of favoritism and corruption in the bank’s administration. Some sources claim that influential individuals have used their positions to benefit from loans and financial deals, bypassing standard banking protocols. These allegations have led to internal conflicts and legal battles, further affecting the bank’s reputation.
• The cyber fraud case involving ₹1.21 crore has added another layer of controversy. While the bank claims to be a victim of hacking and inadequate cybersecurity measures by Yes Bank, critics argue that internal lapses might have contributed to the breach. The failure to secure its banking systems and the delayed response in detecting the fraud raise serious questions about the bank’s operational efficiency.
• Despite these controversies, Wardha Nagari Sahakari Bank continues to function, but its credibility remains under scrutiny. The recent adjudicating officer’s order against Yes Bank has provided some relief, but the cooperative bank must take proactive measures to strengthen its internal controls, enhance transparency, and rebuild public trust.