The State Bank of India (SBI) has been directed to pay ₹1 lakh as compensation to a Punjab resident after a consumer commission found the bank guilty of negligence for repeatedly attempting to recover EMIs even after a car loan had been fully repaid and closed. The commission also ordered the bank to refund ₹590 that was charged as a penalty and to correct the customer’s CIBIL record if it was negatively affected. 

The case was filed by 57-year-old Sanjeev Kumar Nayyar, who had taken a car loan of ₹2 lakh from SBI in January 2021 to purchase a Maruti Suzuki Celerio. According to the complaint, Nayyar regularly paid all EMIs and cleared the entire outstanding loan amount on November 10, 2025. SBI subsequently issued a No Objection Certificate (NOC) confirming the closure of the loan account. 

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However, despite the loan being closed, the bank allegedly continued presenting EMI recovery requests through the National Automated Clearing House (NACH) system. An EMI of ₹4,100 was deducted in December 2025 and again in January 2026. While both amounts were later reversed after Nayyar raised objections, the issue persisted. On January 20, 2026, another EMI recovery request was initiated despite the account having already been closed. This transaction failed due to insufficient funds, resulting in SBI charging ₹590 as bounce charges against the customer. 

After receiving no response to a legal notice sent in February 2026, Nayyar approached the District Consumer Disputes Redressal Commission. During the proceedings, his counsel argued that the bank’s repeated attempts to recover EMIs after loan closure amounted to negligence and caused unnecessary financial loss, harassment and mental distress. 

In its June 3 order, the commission observed that SBI’s repeated presentation of NACH mandates after the loan account had been closed clearly established negligence and deficiency in service. The bench, comprising President Jagdishwar Kumar Chopra and member Mandeep Kaur, noted that the customer’s account statement proved the wrongful recovery attempts and the resulting penalty charges.

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“The repeated presentation of NACH mandates after closure of the loan account clearly establishes negligence and deficiency in service,” the commission said, adding that the complainant suffered mental agony, inconvenience and financial loss due to the bank’s actions.

The commission further remarked that SBI failed to address the customer’s grievance despite repeated representations and adopted an indifferent attitude. It held that the bank’s conduct amounted to deficiency in service, negligence and unfair trade practice under the Consumer Protection Act. The forum directed SBI to refund the ₹590 bounce charge, pay ₹1 lakh as compensation for mental agony and harassment, and provide ₹10,000 towards litigation costs within 45 days. 

Published on: Jun 17, 2026 3:46 PM IST