The State Bank of India (SBI) has been ordered to pay a compensation of ₹1 lakh to a customer in Punjab following a consumer commission's ruling. The commission found SBI guilty of negligence and deficiency in service for repeatedly attempting to recover Equated Monthly Installments (EMIs) for a car loan that had already been fully repaid and closed. In addition to the compensation, the bank was directed to refund a ₹590 bounce charge and to correct any negative impact on the customer's CIBIL record.
A Customer's Ordeal: Loan Repayment and Bank Errors
The case was initiated by Sanjeev Kumar Nayyar, a 57-year-old resident who secured a ₹2 lakh car loan from SBI in January 2021 to purchase a Maruti Suzuki Celerio. Nayyar consistently paid all his EMIs and settled the entire outstanding loan amount on November 10, 2025. Following this, SBI issued a No Objection Certificate (NOC), officially confirming the closure of his loan account.
Repeated Attempts Despite NOC
Despite the loan being closed and an NOC issued, SBI allegedly continued to present EMI recovery requests through the National Automated Clearing House (NACH) system. An EMI of ₹4,100 was deducted in December 2025 and again in January 2026. While Nayyar successfully raised objections and had both amounts reversed, the issue persisted. On January 20, 2026, another EMI recovery request was initiated. This transaction failed due to insufficient funds, leading SBI to charge Nayyar a ₹590 bounce fee.
Legal Action and Commission's Verdict
After receiving no response to a legal notice sent in February 2026, Nayyar approached the District Consumer Disputes Redressal Commission. His counsel argued that the bank's repeated attempts to recover EMIs post-loan closure constituted negligence, causing financial loss, harassment, and mental distress. The commission, in its June 3 order, observed that SBI's persistent presentation of NACH mandates after the loan account's closure unequivocally established negligence and a deficiency in service. The bench, comprising President Jagdishwar Kumar Chopra and member Mandeep Kaur, cited Nayyar’s account statement as proof of the wrongful recovery attempts and the subsequent penalty charges.
Deficiency in Service and Compensation
The commission emphasized that SBI's conduct amounted to a clear deficiency in service, negligence, and an unfair trade practice under the Consumer Protection Act. It noted that the bank failed to address the customer's grievances despite repeated representations, adopting an indifferent attitude. Consequently, the forum directed SBI to refund the ₹590 bounce charge, pay ₹1 lakh as compensation for mental agony and harassment, and contribute ₹10,000 towards litigation costs. The bank was given 45 days to comply with the order.