The Delhi State Consumer Disputes Redressal Commission has directed Citi Bank to refund ₹12,91,248 to a woman after excessive interest charges on her home loan and to pay additional compensation, underscoring increasing scrutiny of banks in long-running disputes.
The Delhi State Consumer Disputes Redressal Commission has ordered Citi Bank to refund ₹12,91,248 to a woman after finding that it collected excess interest on her home loan, in a case that also highlights how consumer forums are increasingly scrutinising banks’ handling of long-running loan disputes. The bank has also been directed to pay ₹1 lakh in compensation and ₹50,000 towards legal costs.
According to the commission, the borrower had taken the home loan at an agreed rate of 12% a year, but the bank later raised the charge and at points applied an effective rate as high as 16.5%. The panel found that this resulted in an excess recovery of ₹12,91,248 through May 2017. The order was passed on August 6, nearly nine years after the complaint was filed.
The commission also said Citi Bank failed to tell the borrower about a key Reserve Bank of India change introduced in April 2010, when the central bank moved bank lending to the Base Rate system. Older borrowers were meant to be given the option to shift to that framework, which could have reduced the woman’s interest burden. The panel said customers cannot be expected to track every RBI circular on their own and that banks have a duty to explain major regulatory changes and the choices available to borrowers.
In its ruling, the commission said a lender cannot unilaterally raise the interest rate on an existing loan without the borrower’s consent. It treated the bank’s conduct as a deficiency in service and an unfair trade practice, relying on earlier court and consumer forum decisions that upheld the same principle. Citi Bank must pay simple interest at 6% a year on the refunded amount from June 2017 until payment if it complies by October 5, 2026; after that, the rate rises to 9% for any default period. The bench was headed by Justice Sangita Dhingra Sehgal, with member Pinki. Recent consumer rulings in Delhi have also gone against builders and housing societies, underscoring the forum’s willingness to order refunds, compensation and interest where it finds service failures.
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