What is the remedy if an ATM debits my account but does not dispense cash?

Question

I tried to withdraw money from an ATM and the machine did not give cash but my account was debited. I want to know how quickly the bank must reverse this and what compensation I can claim. Specifically, I want to know how RBI Circular on Compensation for Failed Transactions using Authorised Payment Systems, 2019 applies to a situation like mine and what the consumer law position in India actually is. If there is a deadline I should be aware of, I need to know that now.

MyVakeel Legal Desk · Accepted Answer

What is the remedy if an ATM debits my account but does not dispense cash? is governed in India primarily by RBI Circular on Compensation for Failed Transactions using Authorised Payment Systems, 2019, Payment and Settlement Systems Act 2007, Section 10, Consumer Protection Act 2019, Section 2(11) and RBI Master Circular on Customer Service in Banks. Outcomes in atm cash not dispensed disputes depend heavily on documentation, so check what you can actually evidence as you read.

Under the RBI's 2019 circular on failed transactions, a bank must reverse a debited amount for a failed ATM cash withdrawal automatically within a maximum of five calendar days from the transaction date without requiring a customer complaint.

If the reversal is delayed beyond five days, the bank must pay compensation of Rupees 100 per day of delay to the affected customer's account, credited automatically without the customer having to claim it separately.

The Payment and Settlement Systems Act 2007 empowers the RBI to regulate all payment systems including ATM networks and to prescribe compensation frameworks that are binding on all banks operating such systems.

Failure to auto-reverse or pay the mandated per-day compensation is a deficiency in service under Section 2(11) of the Consumer Protection Act 2019, and the customer can claim the compensation plus damages through a consumer complaint.

The customer should preserve the ATM transaction slip if issued, or the SMS/account alert showing the debit, as this is the primary evidence for both the bank's internal Turn Around Time process and any consumer complaint.

In practice, in this order: 1) Note the ATM location, date, time and amount, and save the debit SMS or account statement entry; 2) File a written complaint with your bank within the timeline specified for failed transaction disputes; 3) Check that the automatic reversal and Rupees 100 per day compensation, if delayed, have been credited; 4) Approach the RBI Integrated Ombudsman or consumer commission if the bank does not reverse or compensate.

Timing matters here: RBI Circular on Compensation for Failed Transactions using Authorised Payment Systems, 2019 works on limitation periods, so a atm cash not dispensed claim that is right on the merits can still fail if it is brought late. You can post the details on the MyVakeel forum for a practising advocate to review, or book a paid consultation with a Bar Council verified lawyer in consumer law.