Telangana Commission Penalizes SBI for Overcharging Credit Card Holder and Auto-Debit from Customer’s Account
In a recent judgment, the Telangana State Consumer Disputes Redressal Commission, chaired by Smt. Meena Ramanathan and Sri V.V. Seshubabu, held the State Bank of India (SBI) accountable for deficiency in service. The Commission ruled in favor of a customer who alleged that SBI had wrongfully debited money from their account and failed to provide proper justification for the excess charges.
The Case Background
The complainant, a credit card holder with SBI, had purchased an item worth ₹24,710.66 using the bank’s credit card and opted to repay the amount in six Equated Monthly Installments (EMIs). The complainant made payments totaling ₹26,250 in six installments, which already exceeded the purchase price. Additionally, the bank insisted on a payment of ₹5,531, which the complainant also paid.
However, the issue escalated when SBI debited an additional ₹7,979 from the complainant’s savings account without consent. Feeling aggrieved, the complainant filed a case with the District Consumer Commission, alleging that SBI had collected ₹7,341 in excess and sought a refund along with compensation.
The District Commission’s Order
After evaluating the evidence, the District Commission ruled in favor of the complainant and issued the following directives to SBI:
- Refund the excess amount collected.
- Pay a compensation of ₹15,000 with 9% interest.
- Cover litigation costs of ₹5,000.
Unhappy with the decision, SBI challenged the ruling by filing an appeal with the Telangana State Commission.
SBI’s Defense
In its appeal, SBI denied any deficiency in service and argued that:
- The complaint was not maintainable.
- The complainant had purchased goods using the credit card and requested repayment in six EMIs, but this was later converted to 12 EMIs due to a change in the repayment plan, which was communicated through an electronic statement (E-statement).
- The complainant defaulted on payments, leading to an auto-debit of ₹7,979.35 from their savings account.
- The bank had already refunded late fees of ₹2,573 to the complainant.
SBI requested the dismissal of the complaint, claiming the excess charges were justified and the customer was at fault for failing to understand the repayment plan.
Key Observations by the State Commission
The Telangana State Commission thoroughly reviewed the case and upheld the District Commission’s findings. It highlighted the following points:
- Mismatch in EMI Plan:
- The complainant initially requested repayment in six EMIs for the purchase of ₹24,710.66.
- SBI unilaterally converted the repayment plan to 12 EMIs, causing confusion for the complainant.
- Overpayment:
- The complainant had already paid ₹26,250 in six installments, which was higher than the purchase price.
- Typically, EMI payments include interest, but when repaid over fewer installments, the interest should be lower. SBI failed to clarify the interest charged.
- Unjustified Auto-Debit:
- SBI debited ₹7,979 from the complainant’s savings account without consent or prior notification.
- The bank failed to explain why this amount was debited or provide evidence justifying the transaction.
- Lack of Transparency:
- Despite claiming that a refund process had been initiated, SBI could not produce any documentary evidence to support this.
- The Commission concluded that SBI had collected excess funds from the complainant without proper explanation or authorization.
Final Verdict
The State Commission dismissed SBI’s appeal, stating that the bank was indeed at fault. It upheld the District Commission’s original order and directed SBI to:
- Refund the excess amount collected.
- Pay ₹15,000 in compensation for the deficiency in service, along with 9% interest.
- Reimburse ₹5,000 towards litigation expenses.
Broader Implications
This judgment serves as a strong reminder for banks to ensure transparency in their dealings with customers, especially in matters of loan repayment and auto-debits. It underscores the need for clear communication regarding EMI terms, interest calculations, and any changes in repayment schedules. Unauthorized deductions from customer accounts can not only lead to financial losses but also damage trust and reputation.
SBI’s inability to justify the additional charges and its failure to follow due process ultimately led to this adverse decision. For customers, this case highlights the importance of being vigilant about their financial transactions and promptly raising grievances in case of discrepancies.
Conclusion
The Telangana State Commission’s decision reinforces the accountability of financial institutions in ensuring fair practices and protecting consumer rights. This case is a significant win for customers, emphasizing that deficiencies in service and unjustified charges will not go unchallenged.
