Ludhiana: Customer’s documents missing, bank fined ₹5L

The bank admitted that the documents were not traceable and requested the complainant to allow it to reconstruct the lost papers and publish public notices, but it failed to take any concrete steps

The District Consumer Disputes Redressal Commission has directed a private (Axis) bank to pay ₹5,00,000 as compensation to a woman borrower for the loss of her original loan documents and signed cheques that were submitted as collateral at the time of availing an education loan.

The commission also referred to past rulings by the National Consumer Commission, where banks were held liable for not safeguarding customer documents. (HT Photo)

The complainant, who had taken ₹18.50 lakh as an education loan at 13.5% interest per annum in July 2018, had fully repaid the loan by July 2022. As part of the loan agreement, she had submitted several important documents including original sale deeds, non-encumbrance certificate, jamabandi copies and five blank signed security cheques.

After repaying the entire loan, the complainant repeatedly approached the bank for the return of her documents. She alleged that the bank failed to return the same and even misbehaved with her during her visits. Despite sending a legal notice in October 2022, the bank allegedly failed to resolve the matter and responded that the documents were misplaced.

During the hearing, the bank admitted that the documents were not traceable and requested the complainant to allow it to reconstruct the lost papers and publish public notices, but it failed to take any concrete steps on its own. The commission observed that this negligence amounts to deficiency in service and unfair trade practice.

The commission further cited RBI’s 2023 guidelines, which require banks and financial institutions to return all movable or immovable property documents within 30 days after full loan repayment. In case of document loss, the bank is required to bear the expenses of reissuing certified copies and compensate the customer at ₹5,000 per day after 60 days of delay.

The commission also referred to past rulings by the National Consumer Commission, where banks were held liable for not safeguarding customer documents. In its final order, the commission directed the bank to pay ₹5 lakh as compensation within 30 days, failing which interest at 8% per annum would apply. The bank was also instructed to file an FIR/DD report about the lost documents and issue a certificate acknowledging the loss to the complainant.