Axis Bank Ordered to Pay Rs.5 Lakh Compensation for Losing Loan Documents of Woman

The District Consumer Disputes Redressal Commission in Ludhiana has ordered Axis Bank to pay ₹5 lakh compensation to a woman borrower after it lost her original loan documents and security cheques.

In July 2018, the woman had taken an education loan of ₹18.50 lakh from the bank at an interest rate of 13.5% per annum. The loan was provided against security of property. In Banks, whenever, any property is taken as security, then the borrower has to submit original documents of property such as Original sale deeds, Non-encumbrance certificate, Jamabandi copies (land ownership records), etc.. Along with this, Banks also take Five blank signed security cheques.

The loan was repayed in July 2022 and the woman requested bank to return her property documents. After clearing the loan, she approached the bank multiple times to get her documents back. However, the bank failed to return them and allegedly misbehaved with her during her visits. She even sent a legal notice to bank in October 2022 but still the issue was not resolved. The bank finally admitted that the documents were misplaced and the bank could not return the property documents to the woman.

Woman filed case in Consumer Commission

Frustrated with the actions and replies of Bank, She filed the case in Consumer Commmission. The consumer commission stated that the bank’s negligence amounted to deficiency in service and unfair trade practice. It also referred to RBI guidelines and past rulings of consumer commission.

RBI’s 2023 guidelines mandate banks to return customer property documents within 30 days of loan repayment. If documents are lost, banks must bear all expenses for reissuing certified copies and pay compensation of ₹5,000 per day after 60 days of delay.

Past National Consumer Commission rulings have held Banks responsible for failing to safeguard customer records.

Final Order by Consumer Commission

The commission directed the bank to:

• Pay ₹5 lakh as compensation to the complainant within 30 days. If delayed, an 8% annual interest will be added.
• File an FIR or daily diary (DD) report about the missing documents.
• Issue a certificate of loss acknowledging that the borrower’s documents were misplaced.

Finally, the consumer commission ruled in favour of woman and Bank has been ordered to pay compensation for the loss.