We would like to share our views and clarify on the recent article published in Kuensel issue of Dec 1 with regard to the mBoB Indemnity recently introduced. We would like to assure the writer and our clients that the indemnity was solely intended to protect the bank against claims by clients for losses incurred due to transfers and recharges made to the wrong accounts or mobile numbers by the clients themselves while using the mBoB application.  The bank has no intention to waive its obligation for any loss arising out of failure in its systems, be it technical or manual.

With the adoption of technology in banking, systems are dependent on a number of service providers for a transaction to be executed and failure can occur at any point.  The technical failures referred to in the indemnity were meant to address this fact and nothing else.  Unfortunately, it seems to have created a misunderstanding.  Technically, it is impossible for an account to be wrongly credited or debited.  This can only occur due to human error and if the error is done by an employee of the bank, the bank has always and will always reimburse the client first and take the loss if necessary.  However, if the client suffers a loss due to his/her own mistake (such as transfer/recharge to wrong account/mobile number), the bank cannot be held liable but the bank will definitely assist and make all attempts to recover the funds.  If the bank isn’t protected against such situations, the bank has no way of verifying which is a genuine transaction done by a client and which transaction is not.  With clients being empowered to conduct many financial transactions themselves through technology, the controls of initiating a transaction has moved to the client from the bank and hence the bank needs to indemnify itself against any losses arising from such transactions as in the case of transactions done using mBoB.

As per the Contract Act of Bhutan 2013, chapter 11, a contract is formed when there is a proposal, acceptance and consideration. Every promise and every set of promises forming the consideration for each other shall be an ‘‘Agreement’’.  The Indeminty contract which specifies the term ‘‘You agree to indemnify & hold BoB harmless against any direct or indirect loss arising due to technical failure, having wrongly transferred/recharged to the unintended beneficiary’’ has to be broadly interpreted in good faith. The words have to be understood in the real sense and usage and it cannot be interpreted in restrictive form where out of usage the liability is imposed on the customers without taking into consideration the scope of any redressel.

We would also like to clarify specific statements made by the author as below:

“This is because, even for wrong transfer of money into another account due to technical glitch of the bank, the contract imposes the liability to consumers and BoB does not require to indemnify their customers.”

BoB:  There cannot be wrong transfer unless the customers enter the beneficiary account number wrongly.  A wrong transfer to happen due to a technical glitch is impossible.

“However, it does not mean that, companies or corporates can come with up with any kind of condition they wish, in order to escape from accountability and responsibilities and generate enormous profit at the cost of consumers.”

BoB: As a service oriented company, we are always mindful of our services to the customers and equally responsible in case of any issue related to mBoB for which we have tried to have it resolved within shortest possible time. In no way BoB is making a profit at the cost of customers.  This is a very unfair statement by the author.  If there is a transfer to a wrong account, the wrong person receives the funds and the bank cannot recover the funds from the receiver without his consent.  The bank never gains for a wrong transfer

“In mBoB indemnity contract, the provision on technical glitch, consumers have no control over whatsoever and hence, first is it impossible for the consumers to perform such contract.”

BoB: Technical failure – This was meant that if the customer is in urgent need to perform transaction through mBoB but if mBoB is unavailable due to scheduled maintenance, connectivity issue and power blackout, customer cannot hold BoB accountable for unavailability of mBoB services during such time.

“Second, such contract is against other laws particularly the consumer laws as it exploits the consumer’s right to re-dressal for their loss due to technical glitch of the bank.”

BoB: As clarified earlier, the bank does not intend to waive its responsibility for any errors arising from a “technical glitch” as it is technically impossible for any wrongful transaction to occur unless user initiated.  The bank only wants to protect itself from any unreasonable claims by customers.

“Third, inclusion of such clause seems to make the contract very unreasonable, discriminatory and unfair for the consumers.” 

BoB: Inclusion of the clause is mainly to keep our customers reminded to exercise care in executing the transactions through mBoB

“Thus, it is not an isolated case but has become a corporate mindset and culture where they benefit the most and suffer the least.”

BoB: We want to clarify that BoB introduced the mobile application not to make profit but to provide convenience to our customers and we are happy that today mBoB has become a popular service, which has changed the life of our customers. We welcome any comments and suggestions so that we continue to evolve, improve and provide better services.

We would once again like to assure the author and our clients that the Bank of Bhutan as the oldest financial institution would always protect the interest of its clients. However, in doing so, the bank will also always protect itself from anyone who intends to cause any loss to the bank intentionally or unintentionally and it is with only this intention that the bank had introduced the indemnity in mBoB.  We will take the concerns raised by the author and review and revise the indemnity for clarity.

We take this opportunity to thank everyone for their support, their feedback and the discussions raised on this issue.

Bank of Bhutan