February 14, 2026 : In a detailed order reaffirming consumer rights in banking transactions, the District Consumer Disputes Redressal Commission-II, U.T. Chandigarh has held the State Bank of India liable for deficiency in service and unfair trade practice for recovering excess money from a borrower at the time of closing his home loan, even after the RBI Banking Ombudsman had directed a recalculation of the account.
The decision was delivered on 13 February 2026 in Dilbar Singh v. State Bank of India (CC/18/2021) by a bench comprising Mr. Amrinder Singh Sidhu (President) and Mr. B.M. Sharma (Member).
The complainant, Dilbar Singh, had taken a home loan of ₹5,00,000 in 2009 under SBI’s “Happy Home” scheme for a tenure of 15 years on a floating rate of interest. At the time of sanction, the bank provided an instalment schedule and the loan was serviced regularly through ECS without any default. After nearly a decade of repayment, he approached the bank in 2019 and was informed that ₹4,57,325 remained outstanding. On examining his loan account, he alleged that the bank had applied interest at 13.50% per annum instead of the applicable floating rate.
When his written representations were not addressed, he approached the RBI Banking Ombudsman. By order dated 21 May 2019, the Ombudsman directed SBI to recalculate the loan account by applying the Base Rate with effect from 1 July 2010 and MCLR from 1 April 2016, without levying additional charges In compliance, the bank credited ₹96,922 to his account and issued a revised statement showing that ₹59,155.46 was outstanding as on 27 June 2019.
However, when the complainant approached the bank to close the loan on 11 July 2019, he was informed that ₹2,01,728 was payable. He paid the amount and was issued a No Due Certificate. Subsequently, on reviewing the account statements, he found that as per the corrected interest application, the actual amount due on the date of closure was ₹62,857. Alleging that the bank had recovered an amount far in excess of what was legally due, he approached the Consumer Commission seeking refund along with interest and compensation.
The bank defended its action by stating that certain account statements relied upon by the complainant contained manual calculation errors, including repetition of credit entries, and that these were later corrected. It maintained that ₹96,922 had already been refunded in compliance with the Ombudsman’s order and that no further amount was payable.
After examining the pleadings and documentary record, the Commission noted that once the loan was recalculated in terms of the Ombudsman’s directions and ₹96,922 had been credited, the outstanding as on 11 July 2019 worked out to ₹62,857. Despite this, the bank recovered ₹2,01,728 at the time of closure. On reconciling the figures, the Commission concluded that SBI had charged an excess amount of ₹41,949.
The Commission held that such recovery, particularly after regulatory directions for recalculation, clearly amounted to deficiency in service and an unfair trade practice. It partly allowed the complaint and directed SBI to refund ₹41,949 with interest at 9% per annum from 11 July 2019 until realization. The bank was also directed to pay ₹10,000 towards compensation for harassment and litigation expenses. The order is to be complied with within 60 days from receipt of the certified copy.
The ruling underscores that banks remain accountable for accurate loan accounting and must strictly adhere to regulatory directions, especially when recalculations are ordered by statutory authorities.
Cause Title: Dilbar Singh v. State Bank of India
Case No.: DC/AB1/44/CC/18/2021
Coram: Mr. Amrinder Singh Sidhu (President) and Mr. B.M. Sharma (Member)
Date of Decision: 13 February 2026
