District Commission Holds Union Bank Accountable for Illegally Deducting Processing Fee, Cites Deficiency of Service

District Commission Holds Union Bank Accountable for Illegally Deducting Processing Fee, Cites Deficiency of Service

The District Consumer Disputes Redressal Commission in Mumbai presided over by Ravindra Pandurang Nagre (President) and Shraddha M. Jalnapurkar (Member), upheld the filed complaint against Union Bank of India. The Bank was found culpable of both deficiency of service and unfair trade practices.

The Commission determined that the Bank was obligated to waive the processing charges in accordance with their festive promotion, rather than deliberately deducting ₹17,700 from the account. In response, the Commission mandated the Bank to reimburse the debited amount of ₹17,700, along with an annual interest rate of 9 per cent. Additionally, the Bank was ordered to provide ₹10,000 as compensation for causing mental agony and another ₹10,000 to cover legal expenses.

The Complainant lodged a formal grievance against the Bank, contending that the Bank had approved a Home Loan amounting to ₹36 lakh for the Complainant and his spouse, who were co-borrowers. Throughout the application and approval procedure for the loan, the Bank had exempted the Complainant from processing charges, which totalled ₹17,700, in accordance with the terms stated in the sanction letter.

Despite making multiple endeavours to establish communication with the Bank, the Complainant received no response, and the legal notice sent by them went unanswered. The Complainant contended that the Bank's lack of responsiveness indicated negligence, deficiency in services, unfair trade practices, and misrepresentation.

The Complainant initiated legal action by filing a formal complaint with the District Commission. He sought remedies including the repayment of wrongfully deducted processing charges of ₹17,700, along with accrued interest, reimbursement of associated expenses totalling ₹31,000, and an extra compensation of ₹53,923 from the Bank.

The Commission noted that contrary to the intent of waiving processing charges for the home loan, the Bank had deducted these charges from the complainant's account. Moreover, the Commission observed a modification in Point No. 9 of the Sanction Letter, which excluded the provision related to processing fee exemption. It was further observed that the Bank had promoted a festive deal offering a complete waiver on processing charges for home loans sanctioned between September 6, 2019, and December 31, 2019, within specific schemes. Relying on this promotion, the complainant applied for a home loan, which received approval on December 7, 2019, well within the festive offer period.

The Commission concluded that the Bank's actions amounted to both a deficiency in service and unfair trade practices. According to Point No. 9 of the Sanction Letter, the Bank was obligated to waive the processing charges in line with their festive offer. Despite this, the Bank intentionally deducted ₹17,700 from the complainant's account, contradicting the terms of the festive offer. The Complainant had also sent letters and notices to the Bank, requesting a refund along with interest, but the Bank did not adhere to these requests.

The District Commission thus directed the Bank to pay the deducted amount along with interest to the complainant as well as ₹10,000 each for the mental agony caused and litigation costs.