Will RBI direct PNB to credit back customers’ lost money?:Rights of PNB bank a/c holders steps for full recovery in ₹35 crore fraud case

Account holders at Punjab National Bank’s Greater Noida branch faced a major shock after nearly ₹35 crore vanished from multiple bank accounts. Will the RBI Direct PNB to Credit the Lost Money Back? The RBI does not directly credit funds from its own treasury into individual customer accounts in such cases. Instead, as the central banking regulator, the RBI mandates strict timelines that commercial banks like PNB must follow when handling fraud cases. Rights of PNB Depositors and Steps for Full Recovery Account holders affected by the Greater Noida branch incident hold clear legal and regulatory rights under RBI frameworks. But, DICGC deposit insurance of up to ₹5 lakh does not apply to staff-led fraud cases, leaving account restoration governed strictly by the Reserve Bank of India (RBI) customer liability framework rules. Background Of The ₹35 Crore Fraud at PNB Greater Noida Branch The financial fraud came to light at PNB’s Greater Noida branch in Uttar Pradesh, where account holders reported that funds totaling approximately ₹35 crore were missing from their accounts. Several customers discovered zero balances during routine transactions or account updates. Following internal investigations, PNB suspended five officials, including the branch manager. Local police and internal audit teams are currently reviewing account statements, digital transaction logs, and internal approval systems to track how the money was siphoned out without account holder authorizations. Why Affected Depositors Cannot Claim ₹5 Lakh Under DICGC? Many account holders believe that the Deposit Insurance and Credit Guarantee Corporation (DICGC)—a fully owned subsidiary of the Reserve Bank of India—will immediately pay them up to ₹5 lakh for their lost funds. However, under official DICGC rules, this insurance scheme does not cover unauthorized transactions or employee fraud in an operational bank. Key Reasons why affected PNB account holders will not get ₹5 lakh under DICGC Insurance scheme: DICGC Covers Bank Failure, Not Crime: DICGC insurance is activated only when a bank’s license is cancelled by the RBI, or when a bank is placed under liquidation or an official scheme of compromise/amalgamation. PNB Remains Operational: PNB is a functioning public sector bank. Its business has not been shut down by the RBI. Therefore, deposit insurance claims cannot be processed for individual fraud victims. Internal Liability: Money stolen due to internal system failure or employee misconduct is a direct liability of the bank concerned, not an insurance payout event under the DICGC Act. DICGC Deposit Insurance Scheme Details: The Deposit Insurance and Credit Guarantee Corporation provides protection to bank account holders to maintain public trust in the banking system. The scheme operates under strict statutory guidelines set by the RBI and the DICGC Act. Coverage Limit: Each depositor is insured up to a maximum of ₹5 lakh for both principal and interest amounts held in all accounts of all branches of a bank. Types of Deposits Covered: The scheme covers savings accounts, fixed deposits (FDs), current accounts, and recurring deposits (RDs). Premium Payment: Depositors do not pay any premium for this cover. Insured banks pay the premium directly to DICGC on a semi-annual basis. RBI Rules on Customer Liability in Unauthorized Transactions Because DICGC cover is not applicable, the recovery of lost money is governed entirely by the Reserve Bank of India’s official guidelines on “Customer Protection – Limiting Liability of Customers in Unauthorized Electronic Banking Transactions”. Under RBI rules, customer financial liability is determined by whether the fraud occurred due to bank negligence, third-party breach, or customer negligence. Official RBI directives: 10-Day Shadow Credit Rule: Once an account holder notifies the bank of an unauthorized transaction resulting from bank negligence or system failure, the bank must credit the full amount to the customer’s account within 10 working days from the date of notification. This is exactly what is likely to happen in the ₹35 crore PNB bank fraud case. The bank had reportedly assured customers that authorities would credit lost money back into their accounts. Resolution Timeline: Banks are required to resolve customer fraud complaints and settle claims within 90 days. Burden of Proof: The burden of proving that an electronic transaction was authorized by the customer rests entirely on the bank, not the account holder.