Consumer court orders bank to pay Rs 30,000, waive loan for EMI deduction lapse

Time of India

3 days ago

Jharsuguda: A consumer court in Jharsuguda has ordered a nationalised bank to waive the outstanding amount of a customer for service deficiency in handling EMI deductions for a term loan.
In its order on Wednesday, the District Consumer Disputes Redressal Commission also directed the bank to pay Rs 30,000 as compensation along with Rs 10,000 in litigation expenses to the complainant.
The case stemmed from a Rs 5.8 lakh term loan availed by Entkhab Alam of Belpahar and his wife, Mushrat Parween, under a bank scheme in 2009. Despite maintaining sufficient balance in their savings account, the bank failed to deduct EMIs from Nov 2012 to July 2014, resulting in accumulated interest and penal charges.
Alam had lodged the complaint before the commission against the bank's Brajarajnagar branch and its Sambalpur zonal office on Nov 18, 2024.
The commission, headed by president Jigeesha Mishra and member Anju Agarwal rejected the bank's argument that no auto-debit consent was provided by the complainant. The ruling cited RBI guidelines that prohibit charging penal interest on late EMI payments, particularly when partial payments were made to protect the property.
by Taboola
by Taboola
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"The bank's failure to issue timely EMI instructions and subsequent charging of unnecessary penal interest clearly amounts to service deficiency," the commission stated in its order.
The bank has been directed to issue a no-objection certificate within one month. Non-compliance will attract 12% annual interest on the awarded amount until realisation.