Consumer Panel Slaps Axis Bank with Rs 3.19 Crore Penalty for 2016 Demonetisation Refusal
In a landmark ruling, the National Consumer Disputes Redressal Commission (NCDRC) has directed Axis Bank to pay a substantial compensation of Rs 3.19 crore to a Delhi-based logistics company. The commission found the bank guilty of "deficiency in service" for its refusal to accept demonetised currency notes for deposit during the limited window provided after the 2016 demonetisation announcement.
Details of the Case and Commission's Findings
The case involved Procure Logistics Services Pvt Ltd, which filed an appeal against Axis Bank after the bank repeatedly disallowed the company from depositing notified cash into its own KYC-compliant account. The commission, comprising presiding member AVM J Rajendra and judicial member Anoop Kumar Mendiratta, issued an order dated March 10, 2026, stating that the bank's actions persisted until the entire timeline for deposits lapsed.
The commission emphasized that nothing prevented the bank from accepting the cash and reporting the transaction to authorities if it found it suspicious. "If the transactions appeared suspicious, the bank was required to monitor and report them to the competent authorities. The statutory framework did not empower the bank to unilaterally refuse acceptance of deposits in a KYC-compliant account during the permitted window," the commission noted.
Legal Implications and Consumer Protection
This outright denial deprived the complainant of the only lawful opportunity to deposit the demonetised currency within the notified period. As a result, the company suffered a direct and irreversible loss, as the specified bank notes in its possession became worthless after the deadline expired. The commission ruled that this clearly constitutes deficiency in service under Section 2(1)(g) of the Consumer Protection Act, 1986, independent of the regulatory framework governing demonetisation processes.
The commission further stated that acceptance of deposits in duly maintained accounts is an undisputed core banking service, obligating banks to act in accordance with the law. "If any transaction, which is otherwise permitted, is to be refused, the same shall be based on cogent reasons duly communicated and supported by applicable regulatory norms," the order added.
Compensation and Penalties Imposed
As part of the ruling, Axis Bank has been ordered to pay Procure Logistics Services Pvt Ltd Rs 3.19 crore with simple interest at 6% per annum from December 30, 2016, until the date of payment. The commission has mandated that the amount must be paid within two months. Failure to comply will result in the bank being liable to pay interest at 9% per annum for the delayed period.
This decision underscores the importance of adherence to consumer rights and banking regulations, particularly in high-stakes scenarios like demonetisation. It serves as a critical reminder to financial institutions about their responsibilities towards customers during legally permitted transactions.
