When paying a credit card bill, the minimum expectation is that the issuer will promptly settle your account or notify you of any issues. However, for Dr. Bhalla of South Bombay, the situation took a distressing turn. Despite clearing his credit card debt in 2003, the bank reported him as a defaulter, leading to a significant drop in his CIBIL score by 2012.
This severe decline in his CIBIL score caused AMEX to reduce his credit limit by 22.5% and deny him a new credit card. On investigation, Dr. Bhalla discovered an unresolved debt of Rs 5,640 from 2003, which had ballooned to Rs 2.17 lakh due to accumulated interest.
Dr. Bhalla, armed with his bank statement proving the payment, embarked on a seven-year legal battle. He approached the banking ombudsman, district consumer commission, state consumer commission, and ultimately, the National Consumer Disputes Redressal Commission (NCDRC), seeking justice.
Initially, Dr. Bhalla’s attempts to resolve the issue via email with the bank’s nodal officer went unanswered, prompting him to file a complaint with the Banking Ombudsman. The NCDRC order, dated April 9, 2024, noted that Dr. Bhalla had indeed paid Rs 5,640 to Standard Chartered Bank, as evidenced by his savings account transactions.
Despite this, the bank maintained that they had not received the payment, directing Dr. Bhalla to Axis Bank, with whom he had no relationship. It was a letter from ICICI Bank, Vadodara Branch, on March 7, 2013, that became pivotal. This letter confirmed the payment had been made via UTI Bank (now Axis Bank) and cleared through an arrangement with ICICI Bank.
Standard Chartered Bank finally acknowledged the payment after receiving this letter. However, this did not rectify the damage to Dr. Bhalla’s credit history or low credit score. When a legal notice to the bank went unanswered, Dr. Bhalla took his case to the district consumer commission, which dismissed it in January 2016. Persistence led him to the Mumbai State Commission, where his case was accepted in July 2019, culminating in a favorable order from the NCDRC in April 2024.
The NCDRC found Standard Chartered Bank guilty of service deficiency and ordered them to compensate Dr. Bhalla with Rs 2 lakh for mental anguish and Rs 10,000 in litigation costs, plus interest from July 2019, totaling Rs 2.60 lakh. The Commission criticized the bank for misleading the Banking Ombudsman and negatively impacting Dr. Bhalla’s CIBIL score.
Kalindhi Bhatia, Partner at BTG Advaya, emphasized that banks can be held accountable if their errors damage a customer’s credit score, under the Credit Information Companies (Regulation) Act, 2005. Customers can seek redress through the Consumer Protection Act and the Banking Ombudsman.
Shiju PV, Senior Partner at IndiaLaw LLP, noted that while customers remain liable for their debts, they are not responsible for penalties arising from bank errors. In cases of unresolved disputes, he advises maintaining thorough records, promptly reporting issues, and seeking legal counsel if necessary.
This case underscores the importance of vigilant financial record-keeping and proactive dispute resolution, particularly in the era of digital payments. Regular monitoring of credit reports and timely communication with financial institutions are crucial to safeguarding one’s credit score and financial integrity.