Chandigarh bank fined for encashing FDR without account holder’s consent

The district consumer disputes redressal commission penalised a city bank for encashing the fixed deposit receipt (FDR) at lower rate of interest and without the customer’s consent and wish.
Joginder Pal Gupta, an 81-year-old from Sector 37-B, had filed a case against Punjab National Bank, Sector 37-D, Chandigarh through its branch manager. According to the complaint, Gupta being the Hindu Undivided Family “karta” invested ₹36,16,080 in five FDRs with the bank in June 2018.
He alleged that the bank credited ₹8,35,560 by breaking the FDR @ 5.3% p.a. instead of 6.05% p.a. without the consent and wish of the complainant in December 2022. He added that the bank broke the FDR without prior notice and failed to resolve the issue despite his complaint.
Gupta approached the Banking Ombudsman, Sector 17, Chandigarh, which vide order dated March 22, 2023, directed the bank to pay ₹5,000 as compensation for closing the FDR and the complainant was also given the option to approach other courts as per law. Alleging that the aforementioned acts amount to deficiency in service and unfair trade practice, Gupta filed the instant complaint.
In its reply, the bank stated that in December 2022, the complainant insisted on knowing the exact closure proceeds amount of one FDR along with rate of interest on the pretext that he is getting less interest on FDR etc.
“Accordingly, closure process was initiated in the system but inadvertently said entry was passed by second bank official, resultantly the FDR amount was got credited in the account of complainant without charging any penalty amount on account of premature FDR,” the bank stated, adding that Gupta was advised to get the amount converted into FDR again and lastly on December 31, 2022, he again invested the amount in FDR.
Pleading that there is no deficiency in service or unfair trade practice on its part, the bank has prayed for dismissal of the complaint.
The commission, however, observed: “Encashment of the FDR prematurely @ 5.3% p.a. interest instead of promised rate of interest @ 6.05% p.a. without complainant’s consent and wish, and without any prior notice/intimation to him and crediting ₹8,35,560 into the complainant’s account certainly amounts to deficiency in service as also adoption of unfair trade practice on the part of the bank.”
Thus, the bank is legally bound to pay the agreed rate of interest qua which the FDR has already issued to the complainant.
The commission directed the bank to pay ₹64,123 (i.e. ₹8,99,683 minus ₹8,35,560) on account of the pre-encashment of the FDR along with interest @ 7% p.a. from August 20, 2023 till the date of its actual realisation to the complainant.