UCO Bank recovers 80% of erroneously transferred funds: Here's how money got wrongly credited

CNBC-TV18 has learnt that since the time of publishing this clarification, the bank has been able to further recover another ₹9 crore, taking the total recovery to ₹658 crore, or over 80% of the amount so far.

“Our bank officers have been working day and night to stop these erroneous transactions. Most of these took place on the night of Diwali (November 12) and early next morning (November 13), during bank holidays, and since then the officers have been working to block erroneous transactions, send out notices to customers about the money being wrongfully credited, asking them to return the sum. Some customers promptly responded, but some have already used the money wither to buy things or transferred to other accounts, and we are following up with such customers,” said an official involved in the matter who did not wish to be named.

A person familiar with the matter told CNBC-TV18 that the erroneous transactions occurred when customers from other banks initiated transfers to UCO Bank customers, and UCO Bank’s system sent a “transaction failed” message to the remitter banks due to a technical glitch. This, it is understood, resulted in the amount being credited back to the remitter bank, even though the money had been correctly credited to the intended receiver. As a result, while the amount was credited to the intended receivers, it was also mistakenly credited to the sender as well. This person added that such transactions were initiated by customers of about 6-7 other banks to UCO Bank.

UCO Bank had earlier stated that there was a technical glitch in some Immediate Payment Service(IMPS) transactions, due to which transactions done by account holders of other banks came into account holders of the bank without any actual receipt of money from these banks. The bank subsequently clarified that that there was no issue with the IMPS platform, and the error occurred due to an “internal technical issue.” These transactions took place last week between November 10-13, UCO Bank had said.

As a precautionary measure, UCO Bank said it has made the IMPS channel offline and is working closely with stakeholders to resolve the issue and restore the IMPS services at the earliest.

UCO Bank said that all other critical systems are operational, and the financial impact of this, if any, is yet to be ascertained.