Nagpur Consumer Forum penalises SBI for sending recovery notice after loan settlement
Moneylife Digital Team 01 March 2018
In a significant decision, the Nagpur District Consumer Forum has asked State Bank of India (SBI) to pay compensation to a customer for sending loan recovery notice for a loan that was already repaid. 
"This decision will have long lasting impact on banks for sending recovery notices even after loan was paid and paying no heed to requests of the consumers. The Consumer Forum found deficiency in service by SBI and directed bank to pay Rs5,000 towards mental harassment and Rs2,500 as litigation costs to the consumer," says Advocate Mahendra Limaye, who represented the customer.
The case relates with V Sahasrabuddhe had availed a loan of Rs1 lakh from SBI's Dharampeth branch in Nagpur. However, he could not repay the loan in time resulting in the loan being transferred in SBI's Stressed Assets Recovery (SAR) Branch. The SAR Branch offered one time settlement scheme to Sahasrabuddhe, which he accepted and in 2014 repaid his loan as per the formula decided by the Bank.  
However, in 2015, the Bank's Dharampeth branch, from where he had availed the loan, sent him notice for recovery with a warning to initiate action against him under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act. 
After receiving the notice, Sahasrabuddhe visited the Dharampeth branch of SBI and informed them about his loan settlement at SARB Branch. He also requested the Branch to issue a no dues certificate, which was declined by the Dharampeth branch.
Aggrieved by this act of bank Sahasrabuddhe then moved to the District Consumer Forum at Nagpur, which after properly hearing both the parties, held State Bank of India liable for deficiency in service rendered.
In its order, the Forum observed that even after the loan was paid in one branch, the demand for repayment by other branch amounts to deficiency in service. It held SBI liable to pay the costs for litigation and mental harassment.
Advocate Limaye represented Sahasrabuddhe while Adv Pande and Adv Bhopalkar represented SBI before the Consumer Forum.
anil kumar srivastava
6 years ago
Banks lack interse co-ordination in this era of computerisation; but most shocking is lack of administrative will to correct themself on being pointed out by consumers. It appears that Banks are not consumer friendly; rather Banks are
responding consumer's compliant apathetically with colour of sovereignty;which is against the spirit of the foundation of the democratic socialist governance guaranteed in the Greatest Law "The Constitution of India".Banking regulation is now utter failure. Who owns responsibility is a big question?
6 years ago
This is a very common Banking practice. But an uncommon act of Jurisprudence.
This is long overdue. I was debited with renewal fee on a cancelled Standard Chartered Gold Card when I had shifted to Nairobi from Bangalore. Interest was added on it. The debt collector came and badgered my father who, without consulting me, settled. On my return, the Bank began to badger me again. I took the documents and threatened to take them to court. They gave me a letter confirming that I owed them nothing. Years later, I was refused a Credit Card by HSBC with whom I had banked for decades. Luckily, as a former banker, I used my contacts to get a copy of my credit report. I took it to Standard Chartered and told them that if they do not issue a letter to HSBC forthwith, I shall take them to court. They delivered. But think of the stress and trauma for my father who was in his eighties at the time, and the humiliation for me. What happens to somebody without the contacts to get a copy of the credit report to threaten the puisine Bank that behaves like a an Indian High Court that will set aside the Indian Penal Code to favour the scum of the Earth, secure in the knowledge that the Supreme Court will decline to uphold the Rule of law?
Here and there, there are blips of hope.

6 years ago
i bet the entire penalty amount that SBI will file an appeal and pay 10x the cost instead of accepting its fault. of course the depositors subsidize this ego massage...
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