A consumer court in Bengaluru has directed the SBI to waive off the entire outstanding housing loan of Rs 54.09 lakh to be paid by a woman after her husband died of Covid-19. Directing SBI to pay Rs 1 lakh compensation and Rs 20,000 litigation expenses to complainant T Dharani, 36, of Varthur hobli, Bangalore Urban Second Additional District Consumer Disputes Redressal Commission said she suffered financially and mentally due to negligence by the bank. “It amounts to deficiency of service and unfair trade practice by SBI, Whitefield Branch,” the Commission said.
After her husband Roopesh Reddy died on May 20, 2021, Dharani approached the Commission stating that she is unable to meet the expenses of her minor children, parents, household and the loan. She entirely depends on the insurance cover but the bank refused to waive off loan.
SBI contended that Dharani and her husband did not give written consent though they had initially agreed for taking the insurance policy by ticking on ‘yes’ in the application. Hence, SBI Life Insurance Company could not issue a policy. In terms of sanction, the premium was fixed and collected but not remitted to SBI Life Insurance and hence no life insurance was covered for the borrowers, the bank claimed.
The Commission rejected the bank’s defense on the ground that the required formalities were not completed for housing loan insurance coverage under ‘SBI Life-RiNn Raksha’, though premium with interest was being paid through EMI.
The Commission said it is the duty of the bank to complete formalities for home loan insurance at the time of loan sanction. Instead, the account ‘Mc-Maxgain Suraksha’ was closed by SBI without intimation to Dharani and her husband. The SBI-Max Gain Home Loan of Rs 56.18 lakh was sanctioned to the couple to purchase a flat in Bengaluru in 2019.