If you are stuck in such a situation, here is what to do.
Mr. Rohan Sharma, a resident of Varanasi, finds himself in a distressing situation with Apex Commercial Bank, highlighting issues of communication failure and alleged unfair banking practices. Mr. Sharma holds two Business Term Loan accounts with the bank. The annual renewal for these loan schemes was due in March 2024, but he received no prior intimation from his Relationship Manager or any other bank official.
It was only in May 2024 that the bank contacted him for the renewal process. Mr. Sharma promptly submitted all the necessary documents within three days. However, despite his quick compliance, the renewal was not processed. The situation escalated in August 2024 when he was again asked to submit signed documents, which he did immediately. The renewal was finally completed after this second submission.
The core problem arose on September 1, 2024, when an amount of approximately ₹95,000 was suddenly debited from his account, cited as “penal charges” and “interest.” These charges were for the entire six-month period from March to August and were debited in a single lump sum. Mr. Sharma contends that had the penalty been deducted monthly, as is standard practice, he would have noticed the issue in March itself and taken immediate corrective action. The bank’s failure to do so and then debiting a large amount without warning has caused him significant financial strain, especially since he had deposited funds into the account with the intention of reducing his loan liability.
After pursuing the matter with the bank for over two weeks, he received a generic reply that blamed him for the delay. The bank claimed that penalties are deducted on the 5th of each month, a statement contradicted by his account statement, which shows no such deductions from March to August. This indicates a lack of proper investigation into his complaint. The bank staff have not taken any accountability for their failure to guide him on a timely renewal.
Advice in such cases
Document Everything: Keep a meticulous record of all communications with the bank, including emails, letters, and dates and times of phone calls. Note down the names of the officials you speak with.
Written Communication: Always prefer written communication (email or registered post) over verbal conversations. This creates a clear and undeniable trail of your efforts to resolve the issue.
Formal Complaint: Lodge a formal written complaint with the bank’s nodal officer or grievance redressal cell. Every bank is required by the RBI to have a clear escalation matrix. Follow it diligently.
Banking Ombudsman: If the bank does not resolve your complaint within 30 days or if you are not satisfied with their response, you can file a complaint with the Reserve Bank of India (RBI) Banking Ombudsman. This is a free and effective mechanism for dispute resolution.
Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think
Applicable Sections of Law
Such matters are primarily governed by civil and regulatory laws rather than criminal statutes like the Bharatiya Nyaya Sanhita (BNS).
Consumer Protection Act, 2019: The bank’s actions, such as failing to provide timely intimation and levying charges without proper notice, can be considered a “deficiency in service” and an “unfair trade practice” under this Act. You can file a complaint before the appropriate Consumer Disputes Redressal Commission.
RBI Guidelines: The Reserve Bank of India issues various circulars and master directions on Fair Practices Code and customer service. Banks are mandated to follow these guidelines, which emphasize transparency in levying charges and timely communication with customers. Non-compliance can be a strong ground in your complaint to the Banking Ombudsman.
Indian Contract Act, 1872: The loan agreement is a contract between you and the bank. The terms and conditions for levying penal charges are specified in this agreement. If the bank has violated these terms or acted arbitrarily, it can be challenged as a breach of contract.
If you are the complainant
Gather All Evidence: Collect all your loan documents, account statements showing the debit, and copies of all communications (emails, letters) sent to and received from the bank.
Send a Legal Notice: Through a lawyer, you can send a formal Legal Notice to the bank. This notice will detail your grievance, cite the relevant rules and laws violated, and demand a reversal of the charges and compensation for the harassment caused. This often prompts the bank to take the matter more seriously.
File a Formal Complaint: Simultaneously, file a complaint with the RBI Banking Ombudsman online. The process is straightforward and does not require a lawyer initially.
Approach the Consumer Commission: If the matter is not resolved, your lawyer can file a case in the Consumer Commission for deficiency in service, seeking a refund and compensation.
Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think
If you are the victim
Act Promptly: Do not delay in taking action. The first step is to immediately raise the issue with the bank’s branch manager and escalate it through their official grievance channels.
Preserve Records: Ensure your bank statements, loan agreements, and all correspondence are saved securely. These documents are your primary proof.
Do Not Be Intimidated: Bank officials may try to justify their actions or blame you. Stand your ground and insist on a written explanation that clearly justifies the charges with reference to the loan agreement and your account activity.
Explore All Avenues: Use a multi-pronged approach. Complain to the bank, the Banking Ombudsman, and consider legal action through the Consumer Commission simultaneously or sequentially as advised by your lawyer.
Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think
How the police behave in such cases
Police intervention in such matters is highly unlikely and generally not appropriate. This is considered a civil dispute arising from a contractual relationship. If you approach the police, they will most likely direct you to the appropriate civil remedies, such as the Banking Ombudsman or a consumer court. They will typically state that no criminal offence like theft or cheating is made out on the face of it, as the bank has acted under the pretext of a contractual right. Filing an FIR under Section 318 of the Bharatiya Nyaya Sanhita (BNS) for cheating would be very difficult, as you would need to prove a dishonest intention on the part of the bank from the very beginning, which is hard to establish in such cases.
FAQs people normally have
What evidence is required?
To build a strong case, you will need the following:
The original loan agreement and sanction letters.
Bank account statements clearly showing the lump-sum debit of penal charges.
Copies of all emails and letters exchanged with the bank regarding the loan renewal and the subsequent dispute.
Proof of submission of documents for renewal.
A copy of the formal complaint filed with the bank and any response received.
How long will the investigation take?
Bank’s Internal Grievance Process: Typically, banks are required to resolve complaints within 30 days.
RBI Banking Ombudsman: The process can take anywhere from 45 to 90 days, depending on the complexity of the case and the bank’s cooperation.
Consumer Commission: Legal proceedings in the Consumer Commission can be more time-consuming, potentially taking several months to over a year for a final resolution.
Advocate Sudhir Rao, Supreme Court of India