A district consumer commission in Punjab has penalized State Bank of India after a closed car loan allegedly continued to trigger EMI recovery requests, resulting in a wrongful bounce charge of ₹590 against the borrower.
The commission found the bank guilty of deficiency in service, negligence and unfair trade practices. It directed the bank to pay ₹1 lakh as compensation, ₹10,000 towards litigation costs and refund the wrongly imposed ₹590 charge.
The ruling highlights how even a small banking error can create serious inconvenience for consumers when loan closure records and payment mandates are not properly updated.
Borrower Had Fully Repaid Car Loan
The case was filed by Punjab resident Sanjeev Kumar Nayyar, who had taken a car loan of ₹2 lakh in 2021.
Under the loan agreement, he was required to pay a monthly EMI of ₹4,100.
Records showed that he regularly paid all instalments and cleared the full outstanding amount on November 10, 2025.
After the settlement, the bank officially closed the loan account and issued a duly signed and stamped No Objection Certificate on the same date.
EMI Recovery Continued After Loan Closure
Despite the loan being closed, the complainant alleged that the bank attempted to recover EMIs again in December 2025 and January 2026.
On both occasions, the amounts were reversed after he raised objections. Bank officials reportedly assured him that the issue had been resolved.
However, the problem continued.
On January 20, 2026, the bank again presented a National Automated Clearing House mandate for EMI recovery, even though the car loan account had already been closed.
₹590 Bounce Charge Imposed After Failed NACH
At the time of the January 20 recovery attempt, the complainant’s account reportedly did not have sufficient funds.
Because the NACH transaction failed, a penalty of ₹590 was imposed as bounce charges.
The borrower challenged the charge, arguing that the recovery attempt itself was unlawful because the loan had already been fully settled and closed months earlier.
Legal Notice Sent Before Consumer Case
In February 2026, Nayyar served a legal notice seeking a refund of the ₹590 penalty and compensation for inconvenience and mental harassment caused by the bank’s actions.
According to the complaint, he did not receive a satisfactory response.
He then approached the district consumer commission.
Commission Finds Deficiency in Service
After reviewing the loan closure records, account statements and other evidence, the commission concluded that the car loan account had been closed in November 2025.
It observed that repeated EMI recovery attempts after account closure reflected negligence by the bank.
The commission held that such conduct amounted to deficiency in service and unfair trade practice.
CIBIL Record Correction Ordered
The consumer body also noted that the complainant suffered mental stress, inconvenience and loss of time due to repeated follow-ups and visits to the bank.
It further observed that the wrongful recovery attempts could have damaged the borrower’s credit history and CIBIL score.
The commission directed the bank to immediately correct the complainant’s CIBIL record if it had been adversely affected by the wrongful recovery attempts.
Compensation and Refund Ordered Within 45 Days
The commission ordered SBI to refund the ₹590 bounce charge.
It also directed the bank to pay ₹1 lakh as compensation for mental agony and inconvenience, along with ₹10,000 towards litigation expenses.
The amount must be paid within 45 days.
Why Proper Financial Records Matter
This case shows why accurate loan closure documentation, mandate cancellation and account reconciliation are critical for both banks and borrowers.
For businesses and individuals, maintaining clear repayment records, NOCs, bank statements and transaction histories can help resolve disputes faster. Professional bookkeeping services in india can help businesses organise financial records, track payments and avoid confusion during loan, EMI or banking-related reviews.
Shunyatax Global Insight
At Shunyatax Global, we believe financial accuracy protects both consumers and businesses. Whether it is a loan closure, payment mandate, bank reconciliation or compliance record, proper documentation can prevent unnecessary disputes and financial stress.
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