CUDDALORE: A bank that demanded repayment Rs 21 lakh education loan from a man, even after his son’s death, has been ordered to pay Rs 55,000 as compensation for ‘deficiency of banking service.’
The Cuddalore district consumer disputes redressal forum, comprising its president D Gopinath and members V N Parthiban and T Kalyani issued the direction to Indian Bank’s Chidambaram branch, pointing out that it was the bank which had erred in not deducting the insurance premium before releasing the education loan amount to the student.
According to N Kumar, 60, of Chidambaram, he had availed himself of an educational loan of Rs 21 lakh from Indian Bank to fund his son’s MBBS course in a private college in 2016. He said the bank assured him and his son that they would provide insurance cover under IB Vidyarthi Suraksha Policy that would cover the loan in case of his death or his son's death, or both, and that it would entirely liquidate the loan.
On April 22, 2022, his son died in a train accident. The man duly informed the bank about his son's demise with a request to foreclose the loan. The bank refused to do so claiming that educational loans were not covered by any insurance policy. The aggrieved customer then lodged a complaint with the commission.
During hearing, the bank claimed that there was no balance in the insured person’s savings account at any point of time for the bank to deduct and use the amount as premium for insurance policy. The bank further claimed that the complainant requested the bank to deduct the insurance premium amount only after the death of his son last year.
However, after scrutinizing the terms and conditions of the educational loan, the commission found that getting an insurance cover was a precursor to sanctioning of loan and that any premium pertaining must be debited prior to or at the time of sanctioning the loan, from the loan amount itself.
“Failure to do so will not make the opposite parties (Indian Bank) free from their liability and permit recovery of the premium amount from the borrower account as it would lead to a case of enrichment from their own wrongdoings,” said the commission.
The commission also directed the bank to pay Rs 5,000 as litigation costs and ensure that the credit score/ rating of the complainant is not adversely impacted due to outstanding balance in educational loan amount.
