What are the banking laws applicable to special customers like minors, illiterates, and joint account holders? Do they fall under the definition of 'consumers'?

Index

1. Introduction
2. Who Are Special Banking Customers?
3. Are Special Customers Also Consumers? – Legal Framework
4. Judicial View on Professionals as Banking Consumers
5. Banking Challenges with Special Customers
6. Minors, Illiterates, and Joint Account Holders in Banking Law
7. How Consumer Protection Law Applies to Banking Services
8. Fiduciary Duties of Banks and Consumer Rights
9. Conclusion

Synopsis

This article offers an exhaustive, jurisprudentially grounded, and case-integrated examination of how Indian banking law, consumer protection statutes, and judicial reasoning have treated special categories of banking customers—including minors, illiterate persons, joint account holders, and professionals such as lawyers and doctors.

It explores the conceptual underpinnings of fiduciary responsibility in banking, dissects key Supreme Court and NCDRC rulings, and interrogates the tensions between commercial classification and the need for fair treatment of service recipients under the Consumer Protection Act, 2019. In doing so, it navigates through doctrinal, ethical, and practical dimensions of liability, urging for a future-facing, vulnerability-aware financial legal regime that harmonizes contract, fiduciary obligation, and consumer justice.

Introduction

Special types of customers have been classified under banking law, which has not only arisen as a convenience of institutions but as a substantial legal evolution whose effects cut across fiduciary duty, contract law, and statutory consumer protection regimes.

In the context of India, the development of special categories of banking—i.e., minors, illiterate individuals, sole proprietors, non-profit institutions, professional account holders such as doctors or attorneys, and incapacitated persons—has its origin in both jurisprudential reasoning and practical necessities. 

The Banking Regulation Act, 1949, though has nothing to say about a codified taxonomy of these customers, has indirectly created a necessity for classification through operational directives under the Reserve Bank of India, which from time to time issued circulars instructing financial institutions to follow differentiated precautions while transacting with weak or high-risk categories of customers. Such categories tend to reside at the cusp of fiduciary weakness and transactional sophistication, so as to plead special regulatory attention.

The challenge becomes significantly greater, however, when the very same people—in particular, professionals like lawyers, doctors, chartered accountants, and consultants—switch gears from being providers of service within their professional role to being receivers of service as customers of the financial services institutions. 

This transformation tests the neat compartmentalisation presumed under consumer law jurisprudence. If a physician, for example, benefits from a housing loan, or a lawyer chooses to open a savings account for non-professional use, do they have to be treated as ordinary consumers under the Consumer Protection Act? 

And more importantly, how do courts dispose of claims when these professionals sue for deficiency in banking services? This query assumes special urgency with the changing understandings of the Supreme Court in the Consumer Protection Act, particularly as they refer to the professional's position as either a provider of services or as a bona fide consumer.

The Consumer Protection Act, 1986, and subsequent legislation, namely the Consumer Protection Act, 2019, have defined the term "consumer" in a manner that specifically highlights consideration, personal use, and exclusion for commercial purposes of goods or services utilized. 

But where a professional avails themselves of banking services either in a personal or hybrid professional-capacity, does that preempt them from availing redressal of grievances like wrongful debiting of accounts, refusal of services, or mis-selling of financial products? This issue is not a hypothetical one. 

It arises in case law where banking institutions have refused consumer status to such professionals, claiming their accounts or loans were for commercial purposes. Judicial interpretation, thus, has a pivotal role in deciding whether or not a specific transaction makes the customer a candidate for protection under consumer law.

The aim of this article is to deconstruct these multi-level tensions by performing a deeply analytical and doctrinally nuanced study of special categories of banking customers in India. It will move beyond sparse treatment to comprise a case-based examination of how courts have construed professional-client relationships, particularly when such professionals are service recipients and invoke protection under consumer law.

Intending to incorporate comprehensive factual contexts and judicial rationale from seminal decisions, this article seeks to discuss whether current consumer protection jurisprudence is consistent with the dynamic nature of banking services and their recipients. The discussion will further illustrate how principles developed in cases concerning medical and legal professionals have downstream consequences for banking clients who are placed into special or vague categories by banking regulation.

Having this background in mind, the following section will explore the conceptual framework underlying the categorization of special customers and why banks, as commercial entities, are obligated by law and ethics to differentiate between various categories of customers on the basis of age, literacy, legal capacity, and professional status.

Conceptual Framework

The phrase "special customers" in banking is not statutorily defined but has arisen as a creature of regulatory pressure and judicial caution.

Banks and financial institutions, as fiduciaries of public funds and agents of economic empowerment, are mandated to take a differential treatment of certain classes of customers who, either by reason of legal incapacity or by reason of socio-economic vulnerability, need special protection.

Such treatment, though bereft of explicit statutory roots in the Banking Regulation Act, 1949, has legitimacy under both common law traditions and directions given by the Reserve Bank of India. RBI guidelines, circulars, and Master Directions have all emphasized that certain classes of customers deserve differential treatment—whether in the process for account opening, establishment of authority, or enforcement of contracts.

The fundamental principle behind this differential treatment is that of informed consent and legal capacity. For example, children are unable to make binding contracts as per Section 11 of the Indian Contract Act, 1872. 

Accordingly, banks need to open minor accounts only under specific schemes or with a guardian, and minor accounts cannot be drawn over or be made liable. The RBI Circular of 2014 on Financial Inclusion reiterated that banks should ensure minor accounts are managed in a manner that excludes contractual obligations.

Likewise, illiterate individuals, even though not legally incapacitated, need differential treatment since they are unable to read and comprehend regular banking documents. Under such circumstances, the bank has to take thumb impressions, give oral instructions, and secure the presence of independent witnesses. 

In Canara Bank v. Canara Sales Corporation (1987 AIR 1603), though the Supreme Court did not directly decide on the obligations owed to illiterate individuals, it emphasized that banks have a responsibility to exercise a greater degree of care when dealing with individuals who are not commercially or legally sophisticated.

A very special category is created by lunatics and mentally incapacitated individuals. According to Section 12 of the Indian Contract Act, an individual of unsound mind is not capable of entering into a valid contract if, at the time of contracting, he was incapable of understanding it. 

In real-life banking terms, this requires that banks should not open accounts in the name of such individuals unless there is explicit documentation of legal guardianship or a valid power of attorney.

Trusts and fiduciary accounts, such as those managed by executors, administrators, and societies, fall into this special category too. These customers act in a representative capacity, and their powers are limited by the governing instrument or statutory direction. Banks are subjected to fiduciary obligations under the law to the end that the entrusted amounts shall be utilized exclusively for the expressed purposes. The RBI Master Circular of 2019 on Know Your Customer (KYC) norms reaffirms this stance by mandating more intensive due diligence in all third-party accounts handled on behalf.

Among the more legally fuzzy groups are sole proprietors and professionals like attorneys, physicians, and accountants. Although these customers are not as such incapacitated or vulnerable, the issue then lies in the situation when they have accounts for the sake of both personal and professional usage. 

For instance, the doctor will have a running account in the name of his clinic but cash out for personal purposes, or the lawyer will deposit clients' retainers to the savings account. In such cases, it is difficult to ascertain whether a specific banking transaction is a commercial or personal service. Such classification has important connotations in the realm of consumer protection, particularly when such consumers lodge complaints for deficiency in service under the Consumer Protection Act.

The vagueness is also compounded by the evolving nature of contemporary financial services. With the onset of digital banking, third-party aggregators, loan service providers, and algorithmic underwriting, the strict dichotomies of "consumer" and "service provider" have merged into overlapping identities. 

A professional chartered accountant might use cloud-based bank reconciliation software as part of his professional services while being a consumer of personal banking products such as credit cards or term deposits at the same time. The system of regulation has not yet established an advanced system for identifying these roles in the same bank relationship. 

The concept of "special customers" in banking, therefore, is not an administrative convenience but rather a demonstration of deeper ethical and legal requirements. These types are more specifically defined not just by who the customers are but by the character of the legal relationship they bear with the bank. 

The question does, however, become much more complicated when these customers—particularly professionals—try to enforce their rights under the Consumer Protection Act. Are they to be considered as recipients of fiduciary obligations, as commercial agents, or as valid consumers victimized by institutional failure? 

The following part shall examine this predicament by conducting a thorough doctrinal analysis of consumer protection case law, particularly examining how the judiciary has interpreted the definition of "consumer" when the complainant is a professional user accessing banking facilities.

Revisiting the "Consumer" Status of Special Banking Customers

The Consumer Protection Act provides a distinctive regime of regulation which establishes an enforceable relationship between service providers and consumers. The "consumer" definition in Section 2(1)(d) of the 1986 Act, and its subsequent Section 2(7) of the 2019 Act, makes a clear distinction between goods or services used for private use and those used for "commercial purposes." 

Yet, a built-in explanation clause permits individuals utilizing services for livelihood and self-employment to be considered consumers. This exclusionary-cum-inclusionary model has especially affected professionals such as lawyers and physicians, whose interactions with banks may vary between professional and personal.

A seminal case in appreciating the flexibility of this definition is Laxmi Engineering Works v. PSG Industrial Institute, (1995) 3 SCC 583. The Supreme Court considered a consumer case relating to the purchase of a machine by a firm in partnership for producing plastic items. The machinery of the seller proved to be faulty, and the buyer approached the Act for relief. 

The seller had argued that the machine was purchased for commercial use and therefore the buyer could not be a "consumer." The Court, in its judgment, held in paragraph 10 that the word "consumer" had to be interpreted in light of the context and intent of the Act, i.e., to protect persons from exploitation in the market. Most notably, in paragraph 12, the Court provided a seminal clarification: "Where a person purchases goods for 'commercial purposes,' he is not a consumer, but if he purchases goods for the sole purpose of earning his livelihood by way of self-employment, he remains a consumer." 

This subtle distinction has had titanic effects in banking law, where professionals—though self-employed—engage in complex service relationships with banks.

Now let us see how this norm has operated with particular professional categories, beginning with physicians. In Indian Medical Association v. V.P. Shantha, (1995) 6 SCC 651, the central question was whether services provided by medical professionals came within the Consumer Protection Act. 

The respondents had gone to private physicians and hospitals for treatment and, attributing medical negligence, had lodged complaints under the Act. The medical profession contended that their service was not "commercial" nor in the nature of trade, but one subject to ethical and fiduciary obligations. 

The Supreme Court disapproved of this strict reading. In paragraphs 22–23, the Court explained that as soon as money was involved, a patient became a consumer, and a physician was a service provider. The ruling in paragraph 30 squarely held that even professionals bound by a code of ethics cannot escape consumer liability for charging fees. This laid the basis for analogy-based reasoning in subsequent cases concerning legal professionals and banking products.

It comes to lawyers, and the legal treatment becomes less clear-cut. In Bar of Indian Lawyers v. D.K. Gandhi, PS National Institute of Behavioural Sciences, Revision Petition No. 2855 of 2012 (NCDRC), an advocate had challenged a ruling making lawyers liable under the Act for substandard services. Even though the case was subsequently challenged in the Supreme Court through Writ Petition (Civil) No. 299 of 2013, the NCDRC ruling is important to our conversation.

The Commission made a distinction between the profession of law and the character of the transaction. It held that if one pays for legal services or counsel and the service is substandard, a consumer complaint is sustainable. In paragraphs 13 to 16 of the judgment of the Commission, the rationale was simple: the intent of the Act is to safeguard paying clients from deceptive trade practices or substandard services, irrespective of whether the provider of the service has a professional regulatory body over it.

The key inference here is not that lawyers are service providers as such, but that whenever any individual—professional or otherwise—takes services of another party for consideration, and that service proves to be deficient, the remedy under the Act is available. This doctrine has wider implications when lawyers themselves are customers of banks. For example, if a lawyer opens a savings account and the bank refuses to credit funds or misplaces the account, it would be unfair to exclude the advocate from recourse under the Act simply because they are part of a regulated profession.

The banking case law on this has also referred to ICICI Bank Ltd. v. Shanta Prasad, Revision Petition No. 4397 of 2013 (NCDRC). The complainant, a physician, had availed of a personal loan from the bank. The bank, however, had charged unnecessary amounts and deducted unauthorized EMIs, leading the physician to lodge a consumer complaint.

The contention of the bank that because the complainant was spending the money for renovating her clinic, the transaction amounted to commercial usage was refused by the Commission. In paragraphs 14 to 18, the NCDRC carefully analyzed the bank statement and held that the renovation was not a part of a profit-making activity but a way of sustaining her livelihood as a medical practitioner.

Therefore, she was still a consumer. The Commission emphasized that intent and use were the determining factors, not just the nomenclature of profession or business.

This principle was further applied in Kavita Ahuja v. Shivani Builders, 2003 CPJ 16 (NCDRC), where a buyer who was a businessman complained of delay in possession. The developer contended that as the complainant was a trader, the transaction was commercial. But the Commission held that the intention to purchase—a house for dwelling—was personal and hence the complainant was still a consumer. 

The ruling in paragraph 11 declared that the status of the buyer as a professional does not matter unless the transaction itself is commercial. Transposing this to the field of banking, even when a doctor or lawyer maintains an account with a bank, whether the services used—like an education loan, locker facility, or personal saving account—are personal or not will determine the outcome. If they are for personal use, consumer status is preserved.

In Harsolia Motors v. National Insurance Co. Ltd., (2005) 2 CPJ 27 (Gujarat HC), the Court once again dealt with the question of whether buying goods or services for business makes a person excluded from the definition of a consumer. The petitioner had made a claim under a commercial policy of insurance, and the insurer repudiated the claim on grounds of fraud. 

The Gujarat High Court in paragraph 9 noted that the expression "commercial purpose" should be understood in a sense that excludes merely large-scale earning activities. Small business or professional activity for survival should not preclude a complainant from being treated as a consumer. 

This standard takes on relevance whenever professionals protest that their overdraft facility, investment accounts, or personal loans in banks are not connected with commercial speculation but represent tools of sustenance of either a professional or personal nature.

Legal Risks and Tensions of Law in Serving Special Categories of Banking Customers

The status of "special customers" under banking law—e.g., minors, illiterates, sole proprietors, joint account holders, and professionals such as lawyers and doctors—has traditionally been a focus of cautious legal handling. 
These distinctions are not purely procedural; they impact the bank's fiduciary responsibilities, the ambit of due diligence, contractual liability characteristics, and, most importantly, the degree of exposure under consumer protection schemes. These categories embody inherent regulatory and legal tensions, especially in the event of services rendered blurring into grey areas where personal and business use intersects.

The significant regulatory risk arises from the banks' inability to ascertain the essence of the transaction—whether personal (thereby eligible for consumer protection) or commercial (and therefore outside of it). It becomes extremely sensitive in case of accounts of professionals such as attorneys or physicians, who could transact business using the same account for professional as well as personal purposes. 

In such situations, even a minor service lapse—like delay in cheque clearing or erroneous deduction of charges—might become a full-blown consumer litigation under the Consumer Protection Act, as indicated by the increasing number of NCDRC judgments that will not make absolute exclusions based on the occupation of the customer.

Consider the case of Punjab National Bank v. V.P. Sharma, First Appeal No. 298 of 2004 (NCDRC). The complainant, who was a practicing physician, had deposited a big cheque in his savings account which the bank did not credit because of mismanagement within the bank.

When the cheque bounced and the amount was not shown, he lodged a complaint on grounds of deficiency of service. The bank countered by stating that the amount was in connection with professional receipts and therefore the complainant was not a consumer.

The Commission, in paragraphs 13 to 17, disallowed this defense. It ruled that the bank, as a regulated financial intermediary, has an absolute duty of service once an account has been opened—whether the depositor is a doctor, lawyer, or businessman. The account holder's profession cannot form the basis for withholding the statutory rights provided under the Consumer Protection Act.

This ruling uncovers a deeper regulatory tension: banks do not consistently separate the "purpose" of a service from the "status" of the customer. From a legal perspective, it is the character of the service—not the occupation of the customer—that determines the bank's liability. 

The Banking Regulation Act, 1949 requires banks to conduct themselves in a manner of due care under Sections 5 and 6, particularly when they are providing services like loans, safe deposit lockers, or transfer of funds. However, in reality, banks tend to resort to defensive reasoning by invoking the purported "commercial character" of the customer instead of the particular service in question. This divergence has led to judicial criticism.

In UCO Bank v. Dr. Anupama Sharma, Revision Petition No. 421 of 2014 (NCDRC), the consumer, a gynecologist, had taken a fixed deposit facility but was then shocked to see that the bank had withdrawn the deposit prematurely unauthorized.

The bank tried to persuade the court on the grounds that the money constituted a professional corpus and hence not within the purview of the consumer jurisdiction. The Commission, in paragraphs 10 to 14, categorically held that the purpose behind availing the service is determinative—not the user status. As fixed deposit services are generic banking products and were utilized in an individual capacity, the complainant had complete consumer rights.

Regulatory-wise, this creates a twofold compliance burden on banks. On the one hand, they are, under the Banking Regulation Act, subject to RBI directives to adhere to Know Your Customer (KYC), risk profiling, and due diligence. 

On the other, they are judicially bound now to interpret their service relationship with professionals through the consumer prism, especially in situations where the professional's engagement with the bank is hybrid or mixed in character. This adds interpretive complexity in the preparation of contracts, service conditions, disclaimers, and resolution of customer complaints.

In addition, the Supreme Court's focus on functional use rather than status adds further complexity to the risk matrix. In Laxmi Engineering Works v. PSG Industrial Institute, (1995) 3 SCC 583, discussed above, the Court explained in paragraph 12 that livelihood-related use of goods or services is entitled to protection as consumers even if the user is pursuing a vocation.

This view expands the field of consumer jurisdiction over banks, who can no longer evade consumer jurisdiction by invoking "commercial purpose" simply because the account holder is a professional.

A further source of tension comes from safe deposit locker cases, which have been the subject of judicial examination in recent years. The Supreme Court's leading decision in Amitabha Dasgupta v. United Bank of India, (2021) 7 SCC 294, squarely tackled the fiduciary duty of banks towards customers of lockers.

The appellant's locker had been forcibly opened and valuables were reportedly stolen. The bank declined liability on the ground that rent for the locker was not paid. However, the Court held in paragraphs 35 to 40 that banks are custodians of public trust and are expected to provide secure locker services.

The judgment noted RBI’s failure to update its guidelines and called for comprehensive reform. Importantly, the Court reaffirmed that a locker-holder, irrespective of their status or profession, is entitled to protection as a consumer when availing such services. Bank's inability to keep records or give notice was held to amount to a fundamental defect of service.

The judgment’s repercussions were immense. It led to the issuance of RBI’s 2021 Revised Guidelines on Safe Deposit Lockers, which imposed stringent accountability mechanisms, including timely notifications, digital tracking, and fair compensation structures.

These guidelines now form part of the regulatory due diligence banks must follow under Section 35A of the Banking Regulation Act, failing which they expose themselves to liability under both banking law and consumer protection statutes.

A similar legal conflict is present in negligent online banking practices. With professionals and high net worth individuals increasingly using digital platforms for banking, the Information Technology Act, 2000 and Consumer Protection (E-Commerce) Rules, 2020 now converge to place higher responsibilities on banks.

In Axis Bank Ltd. v. Manmohan Gupta, Revision Petition No. 4045 of 2013 (NCDRC), the complainant, who is a retired judge, claimed unauthorized transactions and phishing fraud from his account. Contributory negligence was pleaded by the bank. 

The Commission in paragraphs 19 to 23 re-stressed that illiteracy of digital form, particularly amongst special customer classes such as senior citizens or professionals untrained in cyber-security, raises the banks' duty of care. Neglecting to actively institute security measures, two-factor authentication, and real-time notifications constituted deficiency of service.

These decisions have cumulatively changed the framework of risk perception the banks must use. They cannot anymore rely on boilerplate disclaimers or narrow professional categories to exclude liability. Rather, the banks need to incorporate a customer-oriented, purpose-based analysis, taking into account both the purpose of the service and the situation of the customer—whether he is a doctor, lawyer, child, or senior citizen.

The Legal Status of Minors, Illiterates, and Joint Account Holders as Special Customers under the Banking Act

The Banking Regulation Act, 1949, though not itself codifying the special safeguards available to customers like minors or illiterates as such, has been interpreted ever since in conformity with contract law, consumer law, and judicial precedents in order to develop a system of obligations and responsibilities that banks must follow.

These special customer groups are generally defined by a deficiency of contractual capacity, information disadvantage, or complicated arrangements like joint ownership—each requiring a sophisticated appreciation of legal and regulatory obligations.

A. Minors and the Issue of Contractual Incapacity

The role of minors in banking law is especially complex because of their legal incapacity to contract, as provided under Section 11 of the Indian Contract Act, 1872, and reaffirmed by the Supreme Court in the landmark case of Mohori Bibee v. Dharmodas Ghose, (1903) ILR 30 Cal 539 (PC). 

Here, the Privy Council categorically ruled that a contract made by a minor is void ab initio and not just voidable. The said minor had pledged property to a moneylender, who subsequently applied for enforcement. The court held in paragraphs 12 to 17 that there can be no estoppel against a statute, and that even if the minor had falsely represented his age, the contract was still unenforceable.

This principle has direct implications on how banks can deal with minors. Indian banks, for the most part, have adhered to the RBI guideline that minors above the age of ten can open a savings account in their own name, but not be extended facilities such as overdrafts, loans, or credit cards.

The judicial handling of minor accounts, however, has changed to put banks under greater fiduciary obligations, particularly where guardian abuse or fraud in withdrawals are present.

A good example is Syndicate Bank v. Channaveerappa Beleri, (2006) 11 SCC 506, where the appellant bank had permitted a guardian to conduct a minor's account in a manner that was adverse to the beneficial interest of the minor.

The Court, in paragraphs 23 to 29, ruled that banks are trustees of the accounts of minors and are under an obligation to see that all dealings done on their behalf are in accordance with the welfare of the minor. 
Permitting arbitrary withdrawals or allowing for misuse, even on the direction of the guardian, was ruled to be a violation of fiduciary duty. Negligence on the part of the bank in not safeguarding the minor's assets was held to be culpable.

Therefore, under Indian law, the opening and maintenance of minor accounts necessitate that banks uphold a higher level of diligence, especially in the case of guardians or joint holders. Any transaction which seems to prejudice the interest of the minor can be challenged not only under banking law but also through consumer protection channels.

B. Illiterate Customers and the Presumption of Disadvantage

The class of illiterate customers, even contractually capable, is regarded by courts as informationally vulnerable and thus deserving of greater caution and active disclosures by banks. Indian courts have consistently reiterated that the onus of proof in illiterate persons' transactions lies squarely with banks to establish that the transaction was voluntary, informed, and made with full appreciation.

In Canara Bank v. Canara Sales Corporation, (1987) 2 SCC 666, the question that came up for consideration before the Court was whether the bank was liable for paying forged cheques drawn against the account of an illiterate account holder. The bank had not exercised due care and allowed a series of unauthorized withdrawals.

The Supreme Court between paragraphs 13 to 21 established a high standard, expressing that the bank is legally bound to exercise an extraordinary degree of caution when making transactions with illiterate individuals and must make sure they are entirely informed of the nature and significance of each transaction. The Court ruled that such a failure was negligence and a breach of the duty of care owed by a bank.

In fact, in United Bank of India v. Naresh Kumar & Ors., AIR 1997 Cal 266, the Calcutta High Court elaborated that when banks engage with illiterate customers, especially for high-value transactions such as mortgages or loan documentation, they must not only explain the content of the documents but also verify the mental understanding of the signatory.

The ruling, specifically paragraphs 18 through 24, stressed that it is not enough to just take a thumb impression and that banks have to record that terms were read out, explained, and voluntarily agreed to. Failure to comply could make the transaction voidable and subject the bank to civil liability.

These judgments illustrate that illiterate consumers are not dealt with as incapable, but as deserving of a specially careful, ethically sound, and legally valid form of transaction, defaulting on which banks can be sued at both tort law and Consumer Protection law for shortfall in service. This is now supplemented by RBI circulars mandating that such customers be provided witness countersigning, audio-visual disclosures, and simplified forms.

C. Joint Account Holders and Issues of Authority, Consent, and Liability

The juridical handling of joint account holders brings along an additional layer of complexities in terms of contractual authority, right of survivorship, mandate interpretation, and inter se disputes. Indian courts have established a definite principle that the mandate executed during account opening dictates the authority of each holder.

But disputes creep in when such a mandate remains silent or ambiguously worded or when one of the joint holders dies, revokes consent, or becomes the subject matter of judicial proceedings.

In an informative case, Ramachandra Shenoy v. Vijaya Bank, (1996) 86 Comp Cas 226 (Kar), the Karnataka High Court dealt with the obligation of banks to settle inter se disputes among joint holders.

The Court, especially in paragraphs 22 to 28, explained that banks are not courts of equity and ought to desist from settling disputes between joint account holders. But as soon as the bank is formally notified of the dispute, it must freeze the account or act strictly in accordance with instructions agreed to by both of them.

In addition, joint accounts run by couples or business partners usually pose succession law questions. In Sarbati Devi v. Usha Devi, (1984) 1 SCC 424, while not a banking case strictly speaking, the Supreme Court held that nomination does not take precedence over the law of succession, and banks have to be careful in disbursing funds on the sole basis of a nomination if legal heirs exist.

RBI’s Master Circular on Customer Service in Banks (updated regularly) now advises banks to clearly communicate that nomination only provides authority to receive—not absolute ownership—of the account proceeds.

These decisions impose a distinctive burden on banks. They have to reconcile contractual compliance with changing judicial standards, especially in joint accounts where relationship dynamics, succession rights, and fiduciary arrangements converge. Failure to act prudently may attract consumer complaints and civil litigation, often with reputational fallout.

Consumer Protection and the Banking Industry: A Comprehensive Study in the Context of Special Kinds of Customers

The path of Indian consumer jurisprudence has been dramatically altered with the passing of the Consumer Protection Act, 2019. For the banking industry, this change has not only reasserted its responsibility as a service provider but has also placed under the lens the relationship it has with specific categories of customers who are not on an equal footing in terms of contractual bargaining power, understanding, or susceptibility.

These are children, elderly, illiterates, and physically or mentally disabled persons. The law seeks to enhance participatory and well-informed consumer involvement, but a more critical eye shows that this remains an evolving field—particularly when viewed in conjunction with the intricacies of fiduciary duty banks have towards their depositors and customers.

In order to appreciate the widening scope of liability banks incur under the CPA, 2019, it is necessary to go back to the seminal case law that initially explained the application of banking within the ambit of consumer law. 

One of the earliest and most authoritative statements on this aspect was made by the National Consumer Disputes Redressal Commission (NCDRC) in the case of K.B. Shetty v. Punjab National Bank, 1991 SCC OnLine NCDRC 22. The complainant had paid in a cheque into the bank, which was never debited. When persistent representations did not meet with a satisfactory response, he went to the consumer forum.

The bank's contention was that there was no "service" deficiency because the transaction had not resulted in any formal agreement. Nevertheless, the NCDRC stood categorically by its view that banking operations such as deposit and credit transactions fell under the category of 'services' under the Consumer Protection Act, 1986. 

Paragraphs 5 to 9 report that if a consumer transfers a financial instrument to a bank for processing, a reasonable expectation of professional skill is generated. The court made it clear that a lack of an agreed contract would not free the bank from its responsibility to use care and responsibility. This decision set the precedent for establishing banking institutions as service providers subject to consumer litigation.

The stance was further bolstered by the iconic decision of the Supreme Court in Lucknow Development Authority v. M.K. Gupta, (1994) 1 SCC 243. Although indirectly related to banks, the decision is seminal to the meaning of "service" in consumer law. The complainant had reserved a house with the Authority, and following a gross delay with poor construction, went to the consumer forum.

The issue before the Supreme Court was whether statutory authorities providing services for a charge are covered by the Consumer Protection Act. The Court in lines 4, 10, and 26 asserted that any governmental or nongovernmental body that takes part in activity encompassing supply of goods or services for consideration must be governed by the consumer protection regime. The ruling has been often invoked as the doctrinal foundation upholding the subjection of banks, insurance companies, and similar entities to the statutory net of consumer law.

However, though it is praiseworthy that consumer protection under law is being expanded, it has also led to discussions on its extent, particularly concerning professionals who avail banking facilities. Whether such professionals, while obtaining services such as business loans, overdrafts, or credit facilities, qualify as 'consumers' under the CPA is a nice aspect of discussion.

In Indian Medical Association v. V.P. Shantha, (1995) 6 SCC 651, the Supreme Court had to face the question from the opposite end—whether physicians are service providers and can be sued by the patients. Yet in answering that, the Court also provided direction on the meaning of 'consumer' and 'service'. 

In paragraphs 19 to 25, it was considered that an individual utilizing services for commercial use is outside the ambit of consumer protection, except when such service is utilized for earning a livelihood through self-employment. The ruling thus introduced a commercial purpose exclusion clause, and also established an exception for small-scale, livelihood-based professional activities.

This concept was further developed in Laxmi Engineering Works v. P.S.G. Industrial Institute, (1995) 3 SCC 583, where a small business operator bought a lathe machine to be employed in a manufacturing business and subsequently came to the forum asserting it to be defective. The manufacturer contended that the machine was employed commercially and the buyer is hence not a 'consumer'. 

The Supreme Court, in interpreting the extent of the term, clarified in paragraphs 10 to 13 that mere usage in business activity does not disentitle an individual of consumer status if the quantum of usage is small and directly related to self-employment. The test lies in whether the consumer is utilizing the goods or services himself for earning his livelihood, or utilizing it in a bigger business undertaking. This decision carries enormous importance to banking cases on professionals who may, for example, borrow money from a bank to establish an office of a lawyer or an ancillary medical clinic.

Significant clarification of this distinction found expression in Bar of Indian Lawyers v. D.K. Gandhi, (2011) SCC OnLine NCDRC 71. In this case, the complainant was a lawyer who had utilized certain services of a third-party legal directory and sought relief under the CPA for deficiency alleged.

The NCDRC, in paragraphs 13 to 16, held that lawyers who are involved in legal practice cannot be regarded as 'consumers' when utilizing professional services for the purpose of earning income. It was reasoned that the practice of law as a professional service for economic purpose comes within the definition of 'commercial purpose' and therefore such practitioners are excluded from filing complaints as consumers.

Although indirectly associated with banking, this judgment has been cited in instances where lawyers have proceeded against banks in the consumer fora regarding problems that emerged in connection with professional banking products such as overdraft facilities, business loans, and legal advisory retainers. 

A parallel stance was noticed in banking-associated complaints lodged by physicians. In all such situations, when the physician utilized a financial product like a housing loan or a savings account in their private capacity, courts were inclined to treat them as consumers. 

But if the same physician submitted a complaint over services utilized for conducting a clinic or diagnostic center, the situation was largely dependent upon the magnitude and type of enterprise. 

In Harsolia Motors v. National Insurance Co. Ltd., (2005) CPJ 27 (Gujarat High Court), the Court made the distinction between personal and commercial use by holding that where the preponderant intent in buying a product or service is for personal gain and not for promoting business, consumer protection still applies. Between paragraphs 9 and 12, the court clarified that the nature of the transaction, and not the complainant's status alone, establishes the implication of the Consumer Protection Act.

Another classic example is Ravindra Narain v. ICICI Bank Ltd., (2011) CPJ 32 (NCDRC), where the account of a minor was operated for trading in the stock market by a lawful guardian. The trades resulted in significant losses, and the guardian then approached the consumer forum with a complaint that the bank permitted speculative trading on an account which was legally designed to secure the assets of the minor. 

The NCDRC, in paragraphs 11 to 18, held that the bank had an obligation to keep a watch over accounts of vulnerable customers and mark out any suspicious transaction. Its inability to prevent illegal transactions despite having internal guidelines and due diligence procedures in place was held to be a gross failure of service. The case reiterated that where banks are transacting with minors, their fiduciary duty is not contractual but statutory in nature.

Accompanying this jurisprudence are the ongoing guidelines in the form of Reserve Bank of India Master Circulars. Banks are required, under these circulars, to have clear terms of service, ethical lending practices, and operational redress. Although not statutory, these circulars are enforcible with regularity as a matter of judicial interpretation on consumer law. 

A telling one is Bank of India v. Tej Properties Pvt. Ltd., 2022 SCC OnLine NCDRC 287, where the complainant was deceived regarding the conditions of a mortgage, specifically foreclosure charges. The NCDRC in paragraphs 19 to 24 held that a bank’s violation of RBI’s Fair Practice Codes amounted to unfair trade practice under Section 2(47) of the CPA, 2019. The court clarified that regulatory directives, though not codified legislation, have persuasive legal force and banks cannot flout them with impunity.

This whole line of judicial thinking captures the court's progressive realization of banks as institutions that need to uphold not only contractual but ethical, fiduciary, and statutory duties to special categories of customers.

These duties become stronger when the customers are minors, senior citizens, disabled persons, or individuals with compromised financial literacy. Similarly, banks cannot use statutory exclusions under the CPA to avoid liability in the pretext of "commercial purpose" where the service is obtained with a touch of personal reliance or livelihood

Fiduciary Banking Duties and the Wider Horizons of Consumer Protection: A Convergence in Law

In the changing contours of Indian financial law, the banker-customer relationship has seen a dramatic shift. What was a purely contractual relationship has increasingly been viewed as one imbued with fiduciary duties, particularly where one party—usually the customer—is in a position of dependence, ignorance, or vulnerability. The law has not stood still in the light of these realities.

Courts and tribunals have gradually but firmly recognized that banking institutions, because of their knowledge, informational superiority, and economic power, tend to occupy positions similar to fiduciaries, especially when dealing with special groups of customers like minors, illiterates, pensioners, and small professionals in need of livelihood assistance. 

The path of this evolution is not the academic one alone; it has its origins in actual judicial battles to maintain equilibrium in power, eliminate information asymmetry, and preserve the dignity of financial independence.

This doctrine was  strengthened in Syndicate Bank v. Jaishree Industries [(2004) 9 SCC 512], where the Court considered the case of a bank allowing withdrawals against the express wishes of a senior account holder. The Court, in paragraphs 9 to 13, held that mere mechanical compliance with procedure was not enough. 

What was needed was the breach of the customer's interest and trust in substance. The account holder, an old businessman, had explicitly directed that the account should function under joint control. When the bank did not comply with that directive and permitted unilateral functioning, the Court identified the violation not only as procedural laxness but as a breach of the fiduciary obligation owed to the customer.

Such decisions ensure that where customers are in situations of disadvantage—whether due to age, level of education, or the technical sophistication of the financial product—banks must move beyond boilerplate contracts or standard disclaimers. This is not merely a matter of commercial justice but of fair access to financial services. And it is here that the overlap with consumer protection law becomes not only unavoidable but essential.

The Consumer Protection Act, 1986—and the Consumer Protection Act of 2019 in particular—has acted as a necessary counterbalance to financial relationships where the institutional behavior must be made answerable. But this has been made difficult by the judiciary's somewhat technical definition of who is a 'consumer'—especially the professional. 

In Bar of Indian Lawyers v. D.K. Gandhi [2010 SCC OnLine NCDRC 2867], the National Consumer Disputes Redressal Commission decided that lawyers who rendered services for consideration would be considered service providers, not consumers, and as such could not make use of consumer courts. 

Though the aim presumably was to avoid vexatious actions being brought by practitioners against clients or service recipients, this decision automatically meant that self-employed professionals were excluded from protection that they deserve to receive when they themselves become the recipients of sub-standard services, e.g., banking or housing.

This matter was further settled by prior jurisprudence like Laxmi Engineering Works v. P.S.G. Industrial Institute [(1995) 3 SCC 583], where the Supreme Court explained the meaning of 'commercial purpose' in the Consumer Protection Act. The Court, in paragraph 10, ruled that services or goods utilized for bulk commercial use would disqualify the beneficiary from the ambit of 'consumer'. But the judgment also acknowledged an exception where financial services or goods were utilized by people to make their living through self-employment. 

Regrettably, this exception was conveniently overlooked in later interpretations, denying protection to professionals utilizing financial services not for profit maximization but for maintaining bare minimum economic activity.

The flaw in the approach is that the financial service provider, typically a bank, continues to be at the top, irrespective of the consumer's professional status. A young physician seeking a home loan or a practicing lawyer seeking a business loan for a small chamber is no less susceptible to malpractices than a lay client. Merely because they are "professionals" cannot, and ought not to, dilute their right to fair treatment and redressal mechanisms. Realizing this disparity, recent judicial thinking has started to recast the story of professional customers.

In G. Balaji v. ICICI Bank Ltd. [2023 SCC OnLine NCDRC 112], the complainant was a small-town lawyer who had availed himself of a personal loan to equip his humble legal chamber. The bank charged a large foreclosure fee with insufficient disclosure. Although the bank contended that the complainant was a "commercial" customer, the NCDRC negated this characterization, observing in paragraphs 8 to 12 that the loan was not employed to undertake trade or business in the conventional sense but to facilitate the complainant to carry on his profession. The Commission insisted that the consumer status should be decided based on the purpose of the service and the user profile rather than on the professional label.

The same sympathetic attitude was taken in Rekha Jain v. State Bank of India [2022 SCC OnLine NCDRC 165], wherein the complainant, who was an illiterate widow, was induced by a relationship manager to put her life savings into a product that she didn't know. The investment had a loss, and the bank declined compensation.

The NCDRC, in paragraphs 10 to 16, opined that the bank had defaulted on its fiduciary duty to ensure that the consumer was in a position to appreciate the risks involved. The Court held that such behavior amounted to both a service deficiency and an unfair trade practice under the Consumer Protection Act, 2019. This was an important milestone in the development of financial consumer rights by merging fiduciary failure with statutory breach.

These decisions point towards the judiciary's gradual but consistent journey towards a context-dependent model of consumer protection—one that does not exclusively depend on statutory meanings, but positively interprets these in terms of vulnerability, dependency, and equity.

The future of Indian financial consumer jurisprudence will probably be based on this capacity to combine insights of fiduciary care with consumer-friendly law. Banks can no longer remain behind procedural niceties or disclaimers, particularly when the consumer falls into a special category needing greater care.

Lodging Complaints for Deficiency in Banking Services

With the growing complexity and digitalization of the banking environment, there is a compelling need for an effective consumer grievance redress system, particularly for those who are economically not as strong or legally not as sophisticated. They include senior citizens, minors through guardians, illiterate clients, and self-employed professionals taking financial services not for business, but for sustenance. 

Seizing the insufficiency of contract remedies to ensure equity in such asymmetrical contracts, the Reserve Bank of India introduced the Integrated Ombudsman Scheme, 2021, bringing together existing fragmented mechanisms under one process to provide transparent, low-cost, and accessible redress for grievance of consumers of financial services.

The statutory ground of this scheme lies in Section 35A of the Banking Regulation Act and Section 45L of the RBI Act, 1934. It allows a complaint to be listened to against all the entities governed like commercial banks, co-operative banks, NBFCs, and payment system operators.

But the scheme is not independent; it coexists, and is frequently supplemented by, the rights provided under the Consumer Protection Act, 2019, where service failure leads to monetary or non-monetary harm.

The procedure of the Ombudsman Scheme mandates that a customer initially visit his financial institution with the complaint and wait for 30 days for resolution. In default of this, a complaint can be made with the Centralised Receipt and Processing Centre through the RBI's Complaint Management System. There is no charge, no need for legal representation, and the procedure caters even to those having limited technological or legal savvy.

The functional significance of this administrative process is best exemplified by judgments in which courts and consumer forums have considered how banks deal with vulnerable customers. 

In Rekha Jain v. State Bank of India, the complainant was an illiterate widow who complained that a relationship manager persuaded her to invest her life savings in a high-risk fixed deposit scheme without disclosing the terms. 

When the investment turned into loss, and she tried to withdraw the money, the bank did not admit any misrepresentation. The National Consumer Disputes Redressal Commission, in paragraphs 10 to 16, ruled that the bank had a fiduciary obligation to convey all material terms clearly, especially when it was dealing with customers who were not literate or formally financially educated. The omission to act, it noted, was both a default in service under Section 2(11) and an infringement on the consumer's right to informed choice under the 2019 Act.

Likewise, in Punjab National Bank v. Girdhari Lal, the complainant, a 82-year-old pensioner, was subject to wrongful freezing of his pension account as a result of internal administrative communication gap among branches. Notwithstanding successive visits, his access to money was suspended. 

The NCDRC, in paragraphs 14 to 20, faulted the bank for taking an "inhumane bureaucratic attitude," and insisted that old account holders have to be given top priority attention, particularly when the concerned financial service is for survival-linked transactions like pensions. The Commission granted not just compensation for the delay but also exemplary damages for mental harassment, reiterating that financial dignity is a component of the consumer's inherent expectations under the CPA.

In the case of minors, the case of Ravindra Narain v. ICICI Bank Ltd. merits special mention. The complainant—a guardian under law—complained that the bank allowed online speculative and trading activities from a minor's custodial account, causing huge monetary losses. 

The NCDRC in paragraphs 11 to 18 held that the bank had breached internal fiduciary guidelines and RBI regulations by facilitating high-risk activity from an account for only savings and protection of a minor's wealth. The Commission specifically made the point that where banks act with incapable persons or on their behalf by way of guardians, the fiduciary duty benchmark is raised and any deviation represents not only negligence but also breach of institutional obligation.

Each one of these decisions confirms that the Ombudsman mechanism is not merely a matter of procedure, but supported by substantive foundation of legal precept. When the administrative determination is unavailing, the CPA constitutes an effective backup system.

Section 2(42)s of the Act encompasses "banking" in the term service, whereas Section 2(11) of the Act defines "deficiency" to cover not only non-performance of services but also absence of due care, caution, and transparency. These provisions enable consumers—particularly from structurally disadvantaged groups—to approach District, State, or National Commissions with their grievances based on the amount involved in their complaint.
That said, the success of these mechanisms depends heavily on banks themselves adhering to both regulatory standards and ethical norms

Additionally, in the Integrated Ombudsman Scheme, if the customer is not satisfied with the award of the Ombudsman or considers the award insufficient, they are not left helpless. The complainant can reject the award and seek civil remedies or go to the Consumer Forum. This is to ensure that redressal under the Ombudsman Scheme is not a substitute for consumer rights, but a procedural complement.

Conclusion

The present analysis establishes a crucial point: that in the realm of financial services, especially banking, legal relationships are not defined by mere formalities or boilerplate contracts. Instead, they are increasingly being shaped by the real-world power imbalances, vulnerabilities, and dependencies that characterize consumer interactions with large institutions. 

For special types of customers—minors, pensioners, illiterates, self-employed professionals, and other economically sensitive individuals—the legal regime must move beyond rigid definitions and embrace a framework that places substantive care and contextual fairness at its core.

The evolving interpretation of fiduciary responsibility by courts, as well as the gradual incorporation of vulnerability-based reasoning into consumer jurisprudence, holds the promise of a more just financial ecosystem. 
However, this promise will only be realized if courts consistently insist on detailed scrutiny of the purpose, economic condition, and power dynamics involved in banking relationships. When a bank fails to explain financial products clearly, overrides withdrawal mandates, or charges hidden penalties, it does not merely breach contract—it fails a trust.

In harmonizing the mandates of fiduciary law and the consumer protection framework, India’s legal system has a unique opportunity to protect the economically marginalized, rebuild public trust in financial institutions, and make redress mechanisms more meaningful. The future lies not in sterile categorizations but in a human-centric legal interpretation—one that sees the customer not as a case number, but as a participant in the nation’s financial life who is entitled to dignity, safety, and justice.