Demonetisation Case: NCDRC Orders Axis Bank To Pay ₹3.19 Crore For Refusing Cash Deposit
In a significant ruling on banking liability during the 2016 demonetisation exercise, the National Consumer Disputes Redressal Commission (NCDRC) has held Axis Bank liable for deficiency in service for refusing to accept demonetised currency deposits in a KYC-compliant bank account within the legally permitted time.
The Commission directed the bank to compensate the complainant with ₹3,19,58,500 along with interest, observing that a bank cannot rely on internal policies to override statutory notifications issued by the Government of India and the Reserve Bank of India (RBI).
The ruling reinforces that banks must act strictly within the statutory framework governing financial transactions and cannot arbitrarily deny legitimate banking services.
Case Title
Procure Logistics Services Pvt. Ltd. v. Axis Bank Ltd.
Consumer Complaint No. 2755 of 2018
National Consumer Disputes Redressal Commission
Bench:
- Hon’ble AVM Jonnalagadda Rajendra (Retd.), Presiding Member
- Hon’ble Justice Anoop Kumar Mendiratta, Member
Judgment pronounced on 10 March 2026.
Background
The complainant company had been maintaining a current account with Axis Bank since 2011, which was fully compliant with KYC norms.
After the Government of India’s demonetisation notification dated 8 November 2016, holders of ₹500 and ₹1000 notes were allowed to deposit them in bank accounts within a specified period.
The complainant initially deposited ₹8 lakh on 10 November 2016. However, when it attempted to deposit further amounts, including ₹99 lakh and later ₹20 lakh, the bank declined to accept the deposits citing internal compliance concerns.
Despite submitting audited financial statements and repeatedly requesting acceptance of the deposits, the bank refused to process them. After the deadline expired, the complainant was left with demonetised currency worth ₹3,19,58,500 which could no longer be deposited.
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Issues Before the Commission
The Commission examined three primary issues:
- Whether the complainant qualifies as a consumer under the Consumer Protection Act, 1986.
- Whether the bank’s refusal to accept demonetised currency deposits violated applicable government and RBI notifications.
- Whether such refusal amounted to deficiency in service.
Axis Bank’s Defence
Axis Bank argued that the complainant’s account had been categorised as high-risk, requiring enhanced scrutiny under KYC and anti-money laundering guidelines.
The bank contended that the large volume of cash deposits raised suspicion and that it was obligated to follow regulatory obligations under RBI KYC/AML norms and the Income Tax Rules governing high-value cash transactions.
It also argued that the complainant had previously initiated litigation relating to demonetisation before the Supreme Court and therefore the complaint was not maintainable.
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Findings of the NCDRC
Complainant Is a Consumer
The Commission rejected the bank’s contention that the complainant was not a consumer.
It held that depositing one’s own funds into a bank account does not constitute a commercial activity aimed at generating profit. Consequently, the complainant was entitled to seek relief under the Consumer Protection Act.
RBI Notifications Allowed Deposits
The Commission noted that the RBI framework permitted deposit of demonetised currency in KYC-compliant accounts during the specified window.
Since the complainant’s account had already been verified and remained operational, there was no legal justification for the bank to refuse the deposits.
Internal Bank Policy Cannot Override Statutory Framework
The Commission emphasised that internal compliance policies cannot override statutory notifications issued by the Government of India or RBI.
If a bank suspects irregularities in a transaction, the appropriate course is to accept the deposit and report suspicious transactions to the authorities, rather than deny the transaction outright.
Refusal Caused Irreversible Financial Loss
Because the bank refused to accept the deposits within the permitted period, the complainant lost the opportunity to deposit the currency before the deadline expired.
As a result, the demonetised notes became worthless, causing substantial financial loss.
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Relief Granted
The NCDRC directed Axis Bank to:
- Pay ₹3,19,58,500, equivalent to the demonetised currency refused by the bank.
- Pay interest at 6% per annum from 30 December 2016 until payment.
- Pay 9% interest in case of delay beyond two months.
Key Legal Takeaways
Banks Must Follow Statutory Notifications
Internal banking policies cannot override government or RBI notifications.
Suspicion Cannot Justify Denial of Service
If a transaction appears suspicious, the bank must follow reporting procedures rather than refuse the transaction outright.
Depositing Own Funds Is Not a Commercial Activity
Depositing one’s own money into a bank account does not remove the account holder from the protection of consumer law.
Consumer Courts Have Jurisdiction Over Banking Deficiency
Banks remain accountable under consumer protection laws for arbitrary denial of services.
Significance of the Judgment
This ruling clarifies the legal obligations of banks during extraordinary financial measures such as demonetisation.
The decision reinforces that financial institutions must operate strictly within the statutory framework governing banking transactions and cannot deny legitimate banking services based on discretionary internal policies.
Author
Adv. Sulaiman Bhimani
Founder – The Law Suits
The Law Suits is widely recognized as one of the best law firms in Mumbai and Delhi, known for its expertise in consumer disputes, redevelopment litigation, real estate matters, RERA disputes, NCLT and IBC matters, arbitration, family disputes, senior citizens’ rights, cancellation of gift deeds, civil and criminal litigation, cooperative housing society matters, succession planning, wills, and probate.
Led by Adv. Sulaiman Bhimani, the firm has successfully represented numerous homebuyers, housing societies, and consumers before the National Consumer Disputes Redressal Commission (NCDRC), various High Courts, and the Hon’ble Supreme Court of India, securing landmark reliefs in complex litigation.
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