CHENNAI: A private bank was asked to clear the Rs 34 lakh loan of a deceased techie after a city-based consumer forum found that it failed to inform him about payment of insurance premiums for the debt. The forum, in an order dated October 22, also penalised the bank and the insurance firm Rs 15,000 each for deficiency in service.
The case pertains to a business loan taken by R Mahesh Kumar in 2019 from the DCB bank with a repayment term of 15 years. The lender insured the loan by drawing a policy from ICICI Lombard and collected a premium of Rs 60,381 from Mahesh for three years, but reportedly failed to inform the loanee regarding the payment of premium when the policy expired in 2023.
After Mahesh died due to an illness in July 2024, his father PM Ramadass wrote to the insurance firm raising a claim. The company rejected his claim stating the policy had expired in February 2023 due to unpaid premium. Ramadass approached the Chennai (North) Consumer Disputes Redressal Forum complaining that both the bank and the insurer had failed to inform his son about payment of premium.
While the bank did not appear before the forum, the insurance firm said they had nothing to do with Mahesh as it was the bank which had taken the policy. They declined liability to pay the claim as the policy had expired (February 2023) before Mahesh’s death (July 11, 2024). They contended that the bank should have informed the borrower about the policy.
After perusing the documents which included the bank’s policies, the forum concluded that the bank was the insurance policy holder and the borrower, Mahesh, was the insured. The forum said the borrower had been kept completely in the dark by the bank about the insurance policy document.
The forum agreed with the complainant’s assertion on deficiency in service by the bank and insurer. They directed the bank to close the Rs 34 lakh loan account and issue a No Objection Certificate (NOC) and pay the complainant Rs 20,000 in damages and Rs 10,000 towards litigation cost.