The Chhattisgarh State Consumer Disputes Redressal Commission has ruled against the State Bank of India (SBI) for service deficiencies in an agricultural term loan subsidy case. The bench, comprising President Justice Gautam Chourdiya and Member Pramod Kumar Varma, directed SBI to pay 6% annual interest on the excess interest it charged on the subsidy amount from August 23, 2016, to July 31, 2021.
The complainant had applied for a loan under a Central Government scheme through the Agricultural Machinery Department, Bilaspur, to establish an agricultural machinery bank. A loan of ₹11,20,000 was sanctioned, including a government subsidy of ₹7,50,000, leaving the complainant responsible for repaying ₹3,70,000 in annual installments of ₹46,250 over eight years, plus interest. Although the subsidy was credited to SBI in 2014, the bank only adjusted it in the loan account in 2016. However, SBI continued charging interest on the full loan amount, including the subsidy, until 2021.
Upon discovering the excess interest charges, the complainant issued a legal notice to SBI on July 25, 2022. After receiving no response, a complaint was filed with the Banking Ombudsman on April 12, 2023. SBI admitted to a system error that led to excess interest charges of ₹2,58,000, which it refunded on July 31, 2021, when the loan account was closed. The bank argued that the complaint was time-barred, as the cause of action arose on July 31, 2021, making the 2023 filing beyond the limitation period.
The District Commission, based on expert analysis and bank statements, found that ₹47,364.68 in excess interest remained unadjusted despite SBI’s refund. It ordered the bank to pay this amount along with compensation and litigation costs, partially ruling in favor of the complainant.
Both parties appealed to the State Commission. The complainant defended the Chartered Accountant’s calculations and sought a higher award, while SBI challenged them as arbitrary, arguing that interest beyond the relevant period (up to March 20, 2024) had been incorrectly included. The bank maintained that it had already adjusted ₹2,58,578 on July 31, 2021, as confirmed by the Banking Ombudsman, and sought dismissal of the complaint.
After reviewing the loan documents, the State Commission noted that the subsidy had a three-year lock-in period. The loan was sanctioned on September 13, 2013, and the subsidy was correctly adjusted on August 23, 2016, clearing the bank of delay-related deficiencies. However, SBI admitted to charging interest on the subsidy from 2014 to 2016 due to a system failure. Although it reversed the charges in 2021, the Commission ruled that the correction should have been made on August 23, 2016, when the subsidy was adjusted, confirming a deficiency in service.
The Commission rejected the Chartered Accountant’s calculations for including interest beyond 2021. It ruled that the complainant was entitled to 6% annual interest—comparable to fixed deposit rates—on the ₹2,58,578 excess interest for the period from August 23, 2016, to July 31, 2021.
As a result, the State Commission partly upheld the complainant’s appeal, dismissed SBI’s appeal, and modified the District Commission’s order.
