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EMI scheme: HDFC Bank ordered to pay Rs 35,000 compensation to customer
Times of India, May 18, 2019

BENGULURU: A city consumer court has slammed HDFC Bank and ordered it to pay compensation for illegally converting a customer’s one-time payment towards his credit card into monthly instalments to gain interest and harassing him.

The bank has been asked to pay Rs 35,000 as compensation apart from refunding with interest the extra money collected.

In mid-2014, Yeshwantpur resident C Jayarama got a credit card form HDFC Bank, where he had been holding a saving account since 2010. The 52-year-old also obtained HDFC’s health insurance policy worth Rs 4 lakh and an accident cover scheme after paying Rs 20,734 and Rs 1,573 as respective premium amounts.

Jayarama’s ordeal began after he paid the full amount that was due on his new credit card and instructed HDFC representatives to take full payment through autopay from his account. However, the bank staff converted the payment into equated monthly installments (EMIs), attracting and interest rate of 1.1%, ignoring the customer's instruction.

After having deducted Rs 22,000 from his account, the bank, however, informed Jayarama that he needed to pay an EMI of Rs 2,000 for 24 months. The customer repeatedly told the bank representatives that he had opted for a full-time payment and not EMI with interest. But he was allegedly harassed by the bank’s collection agents, who demanded he pay an additional Rs 33,000 immediately.

Jayarama finally approached the Bengaluru Rural and Urban 1st Additional District Consumer Disputes Redressal Forum on October 7, 2017 with a complaint against HDFC Bank and HDFC Ergo, its insurance arm.

While Jayarama argued his case, HDFC’s team of lawyer termed the complaint baseless and illusionary. The bank lawyer said there was no harassment from their side and the customer availed the insurance through credit card. Since he failed to pay the EMI, the bank deducted money from his account.

However, Jayarama debunked HDFC’s claims with cellphone screenshots of conversations with the bank executive during the relevant period showing lumpsum money to be deducted. The bank failed to produced proof of the customer approving and EMI.

Bank pulled up for flouting rules, deficient service

In the litigation that lasted 18 months, judges of the consumer forum slammed HDFC Bank for not following rules by officially obtaining a written approval from the customer before going ahead with the EMI scheme. They said it amounted to deficiency in service and the bank staff had tormented the customer for no fault of his.

In its verdict pronounced on April 29, 2019, the court ruled the bank manger concerned should refund the money collected in excess from Jayarama since August 2014 with 12% interest within 30 days after deducting the rightful amount. The judges further ordered the bank to pay Jayarama Rs 25,000 towards damage and Rs 10,000 towards court expenses.

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