World · India Bureau
High Court Orders SBI to Repay Woman's Fixed Deposit Amount
The Allahabad High Court has directed State Bank of India to return approximately 19.90 lakh rupees, along with accrued interest, that was withdrawn from a woman's fixed deposit without authorization. The bank had seized the funds to recover a personal loan defaulted by the woman's deceased husband, despite her having no legal obligation as co-borrower or guarantor.
LSN India ·
The Allahabad High Court has issued a ruling against State Bank of India, ordering the lender to refund 19.90 lakh rupees withdrawn from a woman's fixed deposit account along with accumulated interest. The court found the bank's action unlawful as the woman held no legal liability for her late husband's personal loan obligations. The bank had unilaterally transferred funds from the woman's account to settle the outstanding loan dues without proper authorization or legal standing to do so. In its judgment, the court emphasized that depositors' funds cannot be appropriated by financial institutions to recover debts incurred by other account holders, regardless of marital status. The ruling underscores regulatory requirements that banks must follow due process before offsetting customer deposits against third-party liabilities. The decision carries implications for banking practices across the country regarding the protection of individual deposit accounts and the limits of a lender's recovery rights.