The District Consumer Disputes Redressal Commission, Kangra (Himachal Pradesh) bench, consisting of Mr Hemanshu Mishra (President), Ms Arti Sood (Member), and Mr Narayan Thakur (Member), held the State Bank of India (SBI) accountable for unjustly penalizing borrowers who failed to timely furnish the completion certificate for a house financed through the SBI Realty Home Loan Scheme. The commission noted that SBI demanded the certificate six years later without prior notification to the complainants.
Complainants’ Loan and Circumstances
Mr. Narendra Prem Chand Rana and Mrs. Richa Rana jointly applied for a house loan under the SBI Realty Home Loan scheme, intending to purchase land and construct a house. SBI sanctioned a loan of Rs. 40,00,000/- for a plot acquired at Rs. 50,00,000/-. The house construction completed in 2017 with a valid completion certificate, which was promptly submitted to SBI in the same year. Due to pandemic-related delays, the certificate was provided to SBI in May 2022.
SBI did not request the completion certificate between 2017 and 2021. In 2021, upon SBI’s request, the complainants submitted the required documentation. Subsequently, SBI imposed a substantial penal interest of Rs. 9,52,993/- in the complainants’ account statement without providing any prior explanation.
Legal Proceedings and Bank’s Defense
The complainants filed a consumer complaint with the District Consumer Disputes Redressal Commission, Kangra. SBI raised preliminary objections, disputing jurisdiction, maintainability, cause of action, and locus standi. The bank argued that the SBI Realty Home Loan Scheme was distinct from a regular house loan, emphasizing compliance with Town and Country Planning Regulations.
Commission’s Findings
The District Commission referred to the loan agreement terms, highlighting provisions for penal interest in case of payment default or irregularities. It noted that penal interest was initiated without any default on the complainants’ part. SBI failed to communicate the reason for the imposed penal interest.
The commission held SBI liable for a gross deficiency in service, emphasizing the bank’s failure to communicate and the untimely demand for the completion certificate after six years.
Verdict
The District Commission directed SBI to refund the penalty amount of Rs. 9,52,993/-, along with penal interest recovery interest of Rs. 34,639/-. SBI was instructed to pay a compensation of Rs. 1,00,000/- to the complainants, Rs. 15,000/- for litigation costs, and Rs. 25,000/- as punitive damages.
Working in service sector is a punishment in India.. Here, customers get away with anything and everything, and the ones to bear losses are banks, hotels, institutions etc. In this case, when the customer took realty loan, did he not go through what that loan was??? If the house was constructed in 2017, then why did he himself not go and submit the completion certificate?? The pandemic happened only in 2020.. And indeed, realty loan is different from the normal Housing Loan, just that the District Commission also did not go through the product details.. It clearly states penalty in case of non submission of completion certificate..
It seems you are a nationalised bank employee… 😂😂
Go to window no 4
As if customers know everything, it’s banks duty to clearly mention and ask for the required certificate.
Are you a SBI staff or any other Public sector bank staff? Before questioning the judiciary verdict first think about how the banks are treating the customers, While talking loan you want everything in place and you will harass the customer like anything to get the loan passed and if any flaw happens it is not the Bank fault and customer has to bear that.. why bank didn’t ask for the completion certificate are they sleeping? Then what reason the audits happening every year and why no notice has been issued by the bank for these many years, one day they will wake and put a penalty this is so called staffs negligence. You give the big shots in trillions and once they made extradition it will be put on common public in terms of penalty…
Here the two things…the sanctione order could stipulated the submission of Post completion Certfificate and the Borrower could accepted the terms, by signing as tokne of acknowledgement… In such case, its borrower bound to submit the stipulated certificate within time line…in case any delay he/she should volunteered for extension of time line.
On other hand, if levy of penalty happened on post.cutoff time line stipulated, it can’t be disputed.
Either ethargic attitute or lack of tagging mechanism on such certificate on system, its reasons to loss the face by the bank infront of judiciary…
Before charging amount Bank has ask for required documents if not submitted u can charge penal interest. It shows negligence from bank side. After merged the bank many bank branches running like state government offices. No control and no compliance.
The customer initially must have read the Terms and Conditions in the sanction letter which was handed over to him . In that it will be mentioned clearly that failing to submit completion certificate the loan will become non housing loan and attract higher interest rate. Now it is assumed that charging amount by Sbi is legal. If sbi approaches higher authorities they can win the case. This is my personal opinion. I am a retired employee of SBI
90%of this issue is created by the customer is guilty/faulty on account of sleeping for about 3yrs.and not submitting completion certificate.
Banks take undertaking from Cust to inform construction completion while execution documentation for realty. It’s customer duty to inform. Bank can proceed on appeal on this document
Banks typically have a duty to guide customers through the loan process, which includes obtaining necessary documents like completion certificates. Sending timely reminders will act as proactive measure to help customers fulfill their obligations, reducing the risk of penalties and fostering a positive customer-bank relationship. This approach aligns with customer service best practices and can contribute to smoother transactions for both parties.
Did you mention the submission of completion certificate within stipulated time is must in the SANCTION LETTER. Even no bank bothered to give the sanction letter. The different in product is only mean to Banker. But to public it is only housing loan.
Seems like somebody in SBI wanted a bribe and not having received it started harassing the customer.
Yes, true.
did sbi provided any checklist , also why SBI charged with any demand of letter , if even after demanding letter it’s not submitted then only its acceptable to charge customer for not providing document. product are made for customer and SBI should work towards providing proper service to customers
Penal interest clause is applicable for non payment of EMI And pre closure .
In this case Bank official can be visited and verify the occupation of the house besides insisting completion certificate .why for post sanction visit has to be done stage by stage
Whether it is normal regular housing loan
Or Reality loan.
This case may be result of Aduit irregularities
Municipal authorities often take an unduly long time to issue completion certificate. Buyers have to run helter skelter to get CC.
SBI really needs to upgrade the working style.
Well said dear friend
Sbi reality it is time bound to construct house
Same SBI extended housing loan to a party for flat purchase. In the apartment builder constructed 8flats against approved plan for 6flats only. Both unauthorised flats constructed in 2018 itself. But during May 2019 SBI sanctioned loan without insisting plan details In the registered documents itself mystery. Till date builder not obtained revised plan approval due to both unauthorised flats constructed in common areas which is totally impermissible. HDFC also extended housing loan In the apartment. Till date housing finance institutions not insisted completion certificate from the borrowers. Nexus between housing finance institutions and builder/borrowers. 1 out 5 housing loan is fraudulent transaction In our country like hiking the purchase value with blessings of all 3 .
I too have experienced unprofessional SBI staff dealing with Home Loan customers
SBI is absolutely a criminal bank, right, left and centre. Whatever they do is illegal. For our joint SB account ( my wife and mine) they had issued a cheque bearing my name only (which is therefore not accepted by third parties, particularly Mutual Funds, for units in my wife’s name) and when taken up with them, they arrogantly reply, ‘we can delete anybody’s name as we wish. Do what you can’! If penalty is imposed, the Bank bears it, and no staff member is responsible.
Before penalising anybody you must give him opportunity by issuing notice stating clause and implications , why this was not done for 6 years , if any penalising interest is to be taken than it should be from date of issue of notice , Why they slept for so many years ?
Sbi people are banchods
First of all it should be made compulsory to all institutions departments to issue acknowledgements to all correspondence recieved in their offices
This drawback rectification will solve many root causes. While seeking applications for loans organozations are soft,once they sanction loan they become thick skinned.servi e providers need to first see whether their staff are helping genuine customers or harrassing them
SBI is the most disgusting bank now a days without customer permission they are closing loans and giving new loans with more loan amount without our notice and without our permission they are imposing charges and cutting automatically with out our notice if we ask y they are doing such things they are saying RBI changed rules and these loans should be closed .they should ask the customer permission for doing sure things and these things are purely ilegal
Here the two things.
Sanctione order could stipulated the submission of Post completion Certfificate and the Borrower could accepted the terms, by signing as tokne of acknowledgement…
In such case, its borrower bound to submit the stipulated certificate within time line.
in case any delay he/she should volunteered for extension of time line.
On other hand, if levy of penalty happened on post.cutoff time line stipulated, it can’t be disputed.
Either ethargic attitute or lack of tagging mechanism on such certificate on system, its reasons to loss the face by the bank infront of judiciary..