If you are stuck in such a situation, here is what to do.

Mr. Sameer Verma, a resident of Suryanagar, sought a loan of ₹9,00,000 from ‘SecureTrust Bank’ to establish an educational institute. The loan was against his property. After receiving a sanction letter (for which he paid a fee), the ordeal began. The promised timeline was violated, and when he followed up, the bank unilaterally changed the terms, increasing the interest rate and reducing the loan tenure.

The bank’s relationship manager, Ms. Priya, then began a series of escalating and unreasonable demands. She insisted on property documents from before 2014, even though Mr. Verma had clearly stated he purchased the property in 2022 and possessed the chain of documents only until 2014. He was forced to obtain court-certified copies of older documents through the bank’s own lawyer.

Despite assurances that this would suffice, Ms. Priya then demanded he file police complaints for documents he never had and publish notices in four different newspapers, costing him nearly ₹25,000 and significant time. Throughout this, he was also illegally coerced into buying a loan insurance policy for ₹25,000, with chat records proving the bank’s claim that it was “compulsory,” a clear violation of regulatory guidelines.

After two months of fulfilling every demand, the bank introduced a final, previously unmentioned requirement: a registered mortgage fee of ₹28,000. Exhausted and financially drained, Mr. Verma escalated the issue to the bank’s nodal officer and then the RBI Ombudsman. The bank’s response was not an apology but a hostile letter, falsely accusing him of complaining merely to avoid the mortgage fee.

Mr. Verma sought compensation of ₹7,00,000 for his expenses, mental anguish, and the business losses he incurred, as he had to delay his classes, losing over 40 prospective students. The bank rejected his claim. This case is a classic example of deficiency in service and unfair trade practices.

Advice in such cases

• Document Everything: Maintain a meticulous record of all conversations, emails, messages, and calls. Note down dates, times, and the names of the officials you speak with.
• Written Communication: Insist on communicating via email or official letters. This creates an undeniable paper trail.
• Scrutinize the Sanction Letter: Read the terms and conditions of the sanction letter carefully before accepting. It is a binding document.
• 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

The primary legal framework for such grievances is the Consumer Protection Act, 2019. The bank’s actions fall under:

• “Deficiency in Service” [Section 2(11)]: The repeated delays, changing of terms post-sanction, and failure to provide the service as promised constitute a deficiency.
• “Unfair Trade Practice” [Section 2(47)]: Forcing a customer to buy an insurance policy as a mandatory condition for a loan is a classic example of an unfair trade practice. Misleading the customer about the total costs involved also falls under this category.
• Bharatiya Nyaya Sanhita, 2023 (BNS): While primarily a consumer dispute, if there is evidence of dishonest inducement to part with money for fees and charges with no intention of disbursing the loan, it could potentially attract provisions related to cheating under Section 318 of the BNS.

If you are the complainant

• Send a Legal Notice: Before approaching a consumer court, have your lawyer send a detailed legal notice to the bank’s head office, branch manager, and nodal officer. This notice should outline all the facts, the deficiency in service, the financial and mental losses incurred, and a clear demand for compensation.
• File a Consumer Complaint: If the bank does not provide a satisfactory resolution, file a complaint before the appropriate District, State, or National Consumer Disputes Redressal Commission, depending on the loan amount and compensation claimed.
• 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.
• Approach the Banking Ombudsman: You can simultaneously pursue your complaint with the RBI’s Banking Ombudsman scheme for a parallel resolution process.

If you are the victim

• Halt Further Payments: Do not pay any more surprise fees or charges until you get absolute clarity in writing from a senior authority at the bank.
• Escalate Internally: Use the bank’s official grievance redressal mechanism. Escalate the issue from the Branch Manager to the Nodal Officer and then to the Principal Nodal Officer. Keep all complaint numbers and correspondence.
• Preserve All Evidence: Securely save all chats, emails, documents, and payment receipts. This will be crucial for any legal action.
• 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

In situations like this, the police are often reluctant to intervene. They typically view such matters as civil or contractual disputes, not criminal offenses. They will likely advise you to approach a consumer court or a civil court. However, if you can present clear evidence of fraud or cheating (for instance, the bank took processing fees with no intention of ever sanctioning the loan), you can try to file a complaint under Section 318 of the BNS. An advocate’s assistance is highly recommended to draft a complaint that highlights the criminal elements, compelling the police to register an FIR.

FAQs people normally have

What evidence is required?

• The loan application and the sanction letter.
• All email and chat correspondence with the Relationship Manager and other bank officials.
• Receipts for all expenses incurred (fees, court documents, newspaper publications, etc.).
• Proof of business loss, such as communications with potential students or clients.
• A copy of the legal notice sent to the bank and any replies received.

How long will the investigation take?

A consumer case is a quasi-judicial process. The Consumer Protection Act, 2019, mandates an endeavor to decide cases within three to five months. However, the actual timeline can vary based on the complexity of the case, the evidence presented, and the workload of the commission. The Banking Ombudsman process is generally faster and aims for resolution within 30-90 days.

Advocate Sudhir Rao, Supreme Court of India