The Allahabad High Court has directed SBI to return ₹19.90 lakh to Neha Mishra, ruling the bank’s seizure of her fixed deposit for her late husband’s loan was unlawful, and awarded her compensation, highlighting the importance of protecting customer assets from unauthorised recovery actions.
The Allahabad High Court has ordered State Bank of India to return ₹19.90 lakh that it took from a widow’s fixed deposit to recover a personal loan taken by her late husband, while also directing the bank to pay her ₹1 lakh in compensation. According to reports by Indian media, the judges said the bank had no legal basis to seize money from a third party’s account when she was neither a co-borrower nor a guarantor.
The case concerns Neha Mishra, whose husband was an assistant professor in Lucknow. He had taken a ₹15 lakh personal loan from SBI in November 2020 and died in May 2021 during the Covid-19 pandemic. Reports said the loan was covered by an insurance policy, for which he had paid a premium of ₹8,803.
After his death, SBI sent Mishra a legal notice in September 2025 demanding payment of an alleged outstanding balance of ₹13.87 lakh. The bank later froze her salary account, but that restriction was lifted after intervention by the Reserve Bank of India’s ombudsman. While the matter was still being discussed, SBI encashed her fixed deposit and withdrew ₹19.90 lakh.
A bench of Justice Shekhar B. Saraf and Justice Awadhesh Kumar Chaudhary found that there was no contract between Mishra and the bank that would allow such a recovery. Media reports said the court described the bank’s move as a clandestine act and stressed that banks hold customer money in trust. SBI has been told to restore the full sum, with fixed deposit interest, within four weeks.
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