Mohtasib orders bank to pay Rs 1.7 million profit to customer

In June 1999, a customer placed Rs 4.5 million for 5 years with the bank upon written undertaking by two officers that he would receive Rs 9 million upon maturity, says a press release.
However, upon maturity the bank paid only Rs 7.3 million on the grounds that the deposit was placed on P & L sharing basis as printed on the deposit receipt and that banks could not guarantee fixed returns under Islamic banking. A complaint was accordingly lodged with the Banking Mohtasib.
During investigations, the bank admitted the letter issued by its officers but defended the lower profit by saying that after the abolition of interest from the banking system in late 1985, any contract based upon a guaranteed rate of return on deposits placed with banks, is violative of the law and therefore void.
The bank's contention was found to be flawed because the bank's written undertaking constituted a binding contract. If afterwards the bank felt that the committed profit was excessive, it could only have extricated itself from the contact through notice to the customer and by paying a pro rata amount based on the committed rate so that the customer could have had the option to invest in some other profitable deposit scheme.
The Banking Mohtasib felt that if the undertaking issued by authorised officers of the bank was against bank policy, it is the officers who should be held accountable by the bank; the customer cannot be made to suffer for their wrongdoing.
He felt that having attracted the deposits on a certain basis and having confirmed the basis in writing, the bank can not be allowed to walk away from a commitment held out to its customer and directed the bank to pay to the customer Rs 1.7 million being the difference between the amount already paid and the committed amount of Rs 9 million,
In addition, the bank was directed to compensate the customer for loss of profit on Rs 1.7 million short paid from maturity date of the deposit till the date payment of Rs 1.7 million under the Order.
The bank was also directed to pay the customer of Rs 25,OOO towards costs incurred by him in pursuing his rightful dues, inclusive of legal costs since June 2004.-PR