Consumer VOICE

SBI to compensate for issuing recovery notice for settled loan

In an interesting ruling, Nagpur district consumer forum has directed State Bank of India (SBI) to pay compensation to a customer for sending him a 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 forum found deficiency in service by SBI and directed bank to pay Rs 5,000 towards mental harassment and Rs 2,500 as litigation costs to the consumer,” the lawyer representing the consumer said in his statement to the media.

V Sahasrabuddhe had availed a loan of one lakh rupees from SBI’s Dharampeth branch in Nagpur. However, he could not repay the loan on time, resulting in the loan being transferred in SBI’s Stressed Assets Recovery (SAR) branch. The SAR branch offered a one-time settlement scheme, which he accepted and thereafter repaid and settled his loan.

However, in 2015, the bank’s Dharampeth branch, from where he had availed the loan, sent him a notice for recovery, along with a warning that action would be initiated against him under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act. After receiving the notice, Sahasrabuddhe visited the bank branch with his loan-settlement documents and requested for a no-dues certificate, which was declined by the branch.

After hearing both the parties, the forum observed that after the loan was paid in one branch, the demand for repayment by another branch amounted to deficiency in service. It held SBI liable to pay the costs for litigation and mental harassment.

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