Bank, insurance arm fined for wrongly deducting money

  • HT Correspondent, Hindustan Times, Chandigarh
  • Updated: Apr 17, 2014 10:23 IST

For wrongly deducting money at the time of surrendering policy, the district consumer disputes redressal forum, Chandigarh, directed the State Bank of India and SBI Life Insurance Company Limited to pay 20,000 as compensation for deficient services to a city resident.

Disposing of the complaint filed by Suresh Kumar, a resident of Sector 52 (LIG Flats), Chandigarh, on April 11, the forum directed the bank and insurance company to refund a sum of 1.38 lakh retained by SBI Life Insurance Company Limited after surrendering the policy.

The bank and insurance company had also been directed to pay 10,000 as cost of litigation.

The forum presided over by PL Ahuja said, “Kumar was kept under dark right from the date of making an application for the issuance of the policy till the date of receipt of surrender value of the policy. This is clearly deficiency in service as alleged, and unfair trade practice on part of the bank as well as insurance company. The bank and insurance company smartly and cleverly misled the complainant and put him to avoidable financial loss.”

Kumar had got a housing loan of 20 lakh from the SBI in December 2010 and the monthly instalments were to be recovered from his salary account. The house was also got insured by the SBI General Insurance Company Limited in April 2011.

Kumar alleged that he attended a seminar organised by the bank, where the bank manager got certain papers and cheques signed from him in March 2011and in consequence, the SBI opened another loan account for an additional loan of 2.18 lakh in his name and paid this amount to SBI Life Insurance Company, Chandigarh, without his consent.

Kumar claimed that he came to know about the additional loan only when the bank raised demand of outstanding loan amount. He then submitted a request to close SBI Life Insurance Policy in August 2011 but the policy was not closed for a long time and finally the SBI Life Insurance refunded an amount of 79,865 and forfeited the balance amount of 1,38,435. The SBI in its reply denied having got blank papers and cheques signed from the complainant and even denied opening new loan account without the consent of the complainant.

SBI Life Insurance Company Limited claimed that the insurance cover was purely optional and the complainant had applied for it.

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