DBS Bank has blamed "human error" and tightened its processes after a $600,000 cheque bounced 82 days after being cleared.
In a rare case, the uncrossed POSB cheque had been presented by customer Raymond Koh, 56, at its Woodlands branch on April 1 and credited into his account on the same day.
But on June 22, the bank notified Mr Koh that the sum had been wrongly credited as there were insufficient funds in the account of the person who had made the sum payable to Mr Koh.
The bank then deducted cash from two of Mr Koh's accounts to retrieve the $600,000.
A DBS spokesman told The Straits Times: "The isolated incident was due to an inadvertent human error.
"When we discovered that funds had been wrongly credited to the customer's account, we reached out to the customer to inform him that the funds would be debited from his account.
"We have since reviewed and tightened our processes."
The DBS move has left Mr Koh, a Johor Baru-based developer, in search of answers.
" I had full confidence in the banking system but I am very disappointed... that the bank can actually take so long to realise its mistake for such a huge amount," he said. "It did not give me reasons why this happened."
He had visited the bank's branch on April 1 to deposit the cheque into his account and was informed that the sum could be credited directly into his account as the cheque was not crossed and was payable to his name.
He said another bank worker had verified his identity and that a bank slip was issued to acknowledge receipt. "After that, I thought everything was in good order," he said.
Mr Koh, a DBS customer for "umpteen years", said he was also embarrassed and that his "integrity was at stake", as a $200,000 cheque he had made out on June 21 to a law firm was dishonoured as there were insufficient funds in his account following the DBS move.
Through his lawyer Peter Ong Lip Cheng, he alleged that the "unilateral" DBS withdrawals from his accounts without his consent were unlawful and unfair, and demanded that the bank restore the money to his account last month.
DBS, through its Allen & Gledhill lawyers William Ong and Kristin Chua, rejected his claims, pointing out that it had explained to him about the "inadvertent oversight" that had led to the bank wrongly crediting his account.
It pointed out that the terms and conditions governing the operation of Mr Koh's accounts with DBS provided for the bank at any time, without notice, to debit from Mr Koh's accounts any sums that were wrongly credited. It added that the bank had called Mr Koh and followed up with a letter to notify him, although it was not obliged to do so.
Mr Koh said he is considering further possible legal options.
Lawyers said the rare case, if pursued in court, would enable this area of the law, involving the bank and the customer, to be clarified.
Harry Elias Partnership lawyer Tan Chau Yee said that in law, the principle of "unjust enrichment" would apply. So, if the sums were wrongly placed, then the bank had a right to reclaim the money as it belonged to the bank. But he pointed out that a potential litigant could make out a case if he had suffered a loss as a result of a bank's error.