Consumer commission slams bank for ‘deficient service’

Dharwad: The Axis Bank branch in Hubballi has been directed to pay penalty and compensation for allegedly failing to issue a loan-closure certificate even after loan repayment. The order was passed following a complaint filed by Dharwad residents Shivaji Ghatge and Ratna Ghatge before the Dharwad District Consumer Disputes Redressal Commission here.According to the complaint, the couple had availed a housing loan by mortgaging their house. As the repayment was not regular, the bank later classified the account as a non-performing asset and initiated recovery proceedings, including steps to auction the mortgaged property. Subsequently, recovery proceedings were also initiated through the tahsildar.
During this stage, both parties entered into an One-Time Settlement (OTS) agreement. As per the agreement, the borrowers were required to pay Rs 33.6 lakh, after which the bank was supposed to issue a loan-closure certificate and return all property documents.The complainants paid Rs 31.6 lakh and agreed that the remaining Rs 2 lakh, available in their savings account, would be adjusted towards the loan account. However due to a technical error, the Rs 2 lakh amount was not transferred to the loan account. Citing this, the bank withdrew from the OTS agreement and restarted full loan recovery proceedings.Challenging this action, the borrowers approached the consumer commission in Feb 2023, alleging deficiency in service under consumer protection laws.After detailed hearing, the commission observed that the borrowers had substantially complied with the OTS terms and had also authorised adjustment of the remaining amount. It ruled that the bank's decision to withdraw from the settlement citing technical reasons was unjustified and amounted to deficiency in service.The commission directed the bank to adjust Rs 2 lakh from the savings account within one month and issue the loan-closure certificate along with returning all original documents. If technical issues prevent transfer, the borrowers can directly pay Rs 2 lakh, after which the bank must immediately issue the closure certificate and return all documents.