Bank of Baroda has been ordered to pay a compensation of Rs 1.70 lakh to a student pursuing an MS in Mechanical Engineering and Management in Hamburg University, Germany, for its failure to release the second instalment of his education loan.
The complainant, Preetham JB, a resident of Nelamangala in Bengaluru Rural district, fought his case against the bank before the Karnataka State Consumer Disputes Redressal Commission without any legal assistance, stated a report by The New Indian Express.
Modifying the order passed by the district consumer disputes redressal commission and partly allowing the appeal by the bank, the state commission, comprising judicial member KB Sangannavar and member Divyashree M, directed the bank to pay Rs 1.50 lakh to Preetham as damages for causing physical and mental agony and Rs 20,000 as litigation cost.
But what had happened?
Preetham joined Hamburg University of Technology in 2017 and approached the bank for an education loan of Rs 18 lakh. He mortgaged his parents' immovable property worth Rs 42.95 lakh for the loan.
Accordingly, the bank sanctioned Rs 14 lakh on November 29, 2017. The bank called his father to the office of the sub-registrar to get the property intended to be secured for the loan to be registered.
However, the bank officials later insisted that Preetham should execute and sign documents in their presence.
He came to India by spending Rs 40,000 on his air ticket and the bank released Rs 6.24 lakh. When he approached the bank for the remaining amount, it refused to do so. Since he was in need of money, his father sourced Rs 9 lakh from private lenders for higher interest.
The bank contended that it released Rs 6.24 lakh of the Rs 14 lakh loan sanctioned and when the complainant made his own arrangement for Rs 9 lakh to pursue his studies and had completed the course, the question of releasing the remaining loan amount did not arise at all.
The commission observed that the terms and conditions of the loan were communicated only after the disbursement of the first installment and the bank failed to consider the dire need for money, which is nothing but deficiency in service on its part.
