Kotak Mahindra Bank Convicted for Criminal Breach of Trust, Fined Rs 20 Lakh

A court in Chennai has convicted Kotak Mahindra Bank for criminal breach of trust and falsification of accounts. The bank was fined Rs 20 lakh for collecting an excess amount of Rs 14.3 lakh from a customer, R Selvaraj Primson. The court had previously held the bank guilty of perjury in the same case and imposed a fine of Rs 1.5 lakh. It also awarded a three-month imprisonment sentence to the bank's legal head, S Karthikeyan, for his role in the case.

The Case Details: Kotak Mahindra Bank's Breach of Trust

In 2012, customer R Selvaraj Primson approached the court after Kotak Mahindra Bank refused to provide a breakdown of the settlement amount of Rs 1.70 crores paid in 2007. The bank claimed in its affidavit that no excess amount was collected, but the court uncovered that an excess of Rs 14,30,509 had been collected from him. The bank silently transferred this excess amount to Primson's other bank account without any notification.

Modus Operandi: Falsification of Accounts

Kotak Mahindra Bank had been maintaining two sets of account statements. One version, the "customer copy," lacked detailed break-up information, while the "accounts copy" circulated within the bank contained the actual amount due and the excess amount collected. The bank then internally approved diverting the excess funds into the bank's profit account. This internal fraud was revealed by the Central Crime Branch of Chennai Police.

Court Ruling and Compensation to Customer

The court convicted the bank of perjury and ordered a fine of Rs 20 lakh. A portion of this fine has been awarded to Mr. Primson as compensation. He was compensated with Rs 10 lakh for the bank's illegal actions. Mr. Primson shared a crucial message for customers: "When you foreclose a loan, always demand a break-up of the settlement amount to avoid overpaying."