“Jaldi Karenege Jaldbaazi Nahi,” the new tag line of Google Pay is worth following, or else you could make a mistake like American Bank did last year. Citibank’s $900mn blunder is considered the biggest blunder in banking history causing the bank to face a tremendous amount of loss.
Citing it as human error, the bank demanded the money back. Did it succeed in recovering the loan amount of $900mn i.e. ₹6,500 crores approx. ?
Read further to know.
Biggest Mistake In Banking History
Citibank is working as an administrative loan agent for a cosmetic company of US, Revlon, and its creditors. In August 2020, the bank made a huge mistake, and instead of paying interest of $8mn on the term loan given by the creditors to Revlon, the bank accidentally transferred the principal amount that was $900mn.
Citing as a human error, Citibank asked the creditors to refund the money. Unfortunately, lenders denied the bank’s request following which the bank had moved to court.
Luckily, few creditors had returned some portion of the accidental transfer but the amount of $500mn i.e. ₹3,629 crores is left unrecovered for which the bank is battling hard with lenders.
Lenders are aware of the accidental transfer of money so they are not liable to keep the money, said Citibank.
The Court’s Judgement In The Case
Unfortunately, the US District Court Judge Jesse Furman didn’t announce the decision in the bank’s favor. The judge called the transaction to be final and complete and they are not subject to reversal. The reason behind this statement is worth acknowledging because the fund transfer process of any bank is not simple.
The rigorous process involves all the details of the recipient, sender, verification, approval, and acknowledgment. So, the error can be easily spotted during the entire process.
There have been cases of accidental payment from the customer’s end and the bank is not liable to return the money. But, in the case of Citibank, the scenario is complete upside down raising the question, whether creditors should return the money or not?
According to the legal rule of New York, if creditors are unaware of the mistaken payment they can keep the amount. So, ultimately the decision goes in favor of creditors of Revlon but the bank is not happy with the court’s judgment and said, ” will appeal the court ruling.”
Let’s see what lies ahead in the Citibank $900mn blunder.