SBI : In a significant ruling, the National Consumer Disputes Redressal Commission (NCDRC) has set aside a previous order by the Uttar Pradesh State Consumer Disputes Redressal Commission and upheld the order passed by the Ghaziabad District Forum.
The NCDRC has directed the State Bank of India (SBI) to pay interest on a Foreign Currency (Non-Resident) (FCNR) term deposit belonging to a non-resident Indian (NRI) account holder at the prevailing rate for five years from June 20, 2006.
Dr. Narendra Kumar, the NRI account holder, had initially invested US$1,39,995 in June 2006 in the reinvestment plan known as the Special Term Deposit Receipt (STDR) scheme under the FCNR account. This investment was explicitly intended for a five-year term, with an agreed interest rate of 5.43% per annum.
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However, a discrepancy arose when SBI opened the FCNR deposit account for only one year at 5.43% per annum, and subsequently renewed it with a lower interest rate of 4.57% the following year.
Dr. Kumar insisted that he had invested the amount for five years and that SBI had assured him of the deposit’s renewal on maturity in June 2007 for another five years. However, to his dismay, the STDR was renewed for only one year, not the agreed-upon five years, despite SBI’s prior assurance.
Alleging a loss of interest, deficiency in service, and unfair trade practices by SBI, Dr. Kumar approached the Ghaziabad District Forum, seeking compensation totaling US$31,166.33, which represented the difference in interest and other reliefs.
In a surprising turn of events, SBI admitted its readiness to pay Dr. Kumar the interest for the period from 2007 to 2012 but at a reduced interest rate of 4.57% per annum instead of the initially agreed-upon 5.43% per annum. Despite this admission, the District Forum ruled in favor of Dr. Kumar, ordering SBI to pay interest at the initially agreed-upon rate of 5.43% per annum for five years from June 20, 2006.
SBI subsequently appealed the District Forum’s decision to the Uttar Pradesh State Consumer Disputes Redressal Commission. This commission set aside the District Forum’s order, contending that Dr. Kumar had not raised an objection regarding the deposit’s period when the STDR was initially issued in June 2006.
Dissatisfied with this outcome, Dr. Kumar took the matter to the National Consumer Disputes Redressal Commission (NCDRC). He argued that the State Commission had failed to consider the written mandate he had provided for the renewal of the STDR for five years at the agreed-upon interest rate.
The NCDRC bench, presided over by Subhash Chandra and Bharatkumar Pandya, found that the State Commission’s conclusion regarding the period of the renewed FCNR deposit was flawed. It noted that SBI had not denied issuing a letter to Dr. Kumar stating the non-renewal of the FCNR deposit for five years due to a system error, thereby acknowledging its mistake.
The NCDRC firmly concluded that Dr. Kumar’s mandate had been for a five-year STDR with an interest rate of 5.43% per annum. SBI’s denial of this mandate constituted a deficiency in service and an unfair trade practice, according to the commission.
In light of these findings, the NCDRC overturned the State Commission’s order and upheld the Ghaziabad District Forum’s decision. This landmark ruling serves as a reminder that financial institutions must honor their commitments to customers, particularly in cases involving non-resident Indians and their investments.
The NCDRC’s decision ensures that Dr. Narendra Kumar receives the interest on his FCNR deposit as initially agreed upon, setting a precedent for accountability in the banking sector.
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