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Banking sanction letter

(Querist) 21 September 2014 This query is : Resolved 
I had obtained an education loan from State Bank of India for pursuing Master’s education. I along with my father are Joint Borrowers for the education loan. Among other documents, I and my father also executed an arrangement letter cum Loan sanction letter along with terms and conditions, Dt: 27/12/2006 at point no.6(2a) of the said letter under sub heading SBI Life Yearly Premium which reads “SBI Life Yearly Premium to be debited to Loan Account:Re Obtain SBI SHIELD before disbursement of loan”. This arrangement letter was signed by all the parties to it i.e. Joint Borrowers ( myself and my father) and Astt.General Manager (RACPC), State Bank of India.

I had requested the Central Public information officer to give Copy of the insurance policy “SBI Shield” covering the lives of the “Joint borrower” for Education loan as per the terms and conditions mentioned in the arrangement letter, under the RTI Act 2005, as per my application dated 10-04-2014. Thereafter I received reply from Central Public Information Officer, Ref: Lr. No SARB/SVR/2014-15/24,Dt: 08/05/2014 wherein he has expressed the inability to furnish the Copy of the insurance policy “SBI Shield” covering the lives of the “Joint borrower” for Education loan "as there is no stipulation in the arrangement cum sanction letter for obtaining a life insurance policy of the borrowers as per the terms and conditions mentioned in the arrangement letter”, Which is a lie and completely contradictory.

I was not satisfied with the reply of Central Public Information Officer hence I filed first appeal. I filed an appeal with the appellate authority with an additional document titled "Most Important Terms and Conditions" issued by State Bank Of India Corporate office to all State Bank of India Branches across India point No.4 under sub heading expenses considered for loan which reads “Premium of the insurance policy covering the life of the borrowers of the loan”. I did not receive any reply.

At the time of availing the education loan,the bank has taken a “SBI life insurance policy”(SBI Shield) for Rs25.00 Lac in the name of each borrower i.e myself and my father from its sister concern SBI Life Insurance Co.Ltd and assigned itself as the nominee in the case of death of any borrower. At the time of disbursing of the loan the bank has taken the signature of the borrowers in the life insurance policies and letter of assignments which stands in the favor of the bank as beneficiary. As such the bank has taken the “ SBI Shield ” in the name of the borrowers before the disbursement of the loan.

The bank is silent whether they have encashed the life insurance policy standing in the name of the second borrower i.e my late father.

After adjustment of the loan outstanding amount with the benefit of the insurance policy of Rs 25.0 Lacs.I am entitled to balance amount of insurance policy which is approximately Rs 9.0 Lacs.

Can I file a civil suit against the bank for breach of contract, dishonesty, cheating or any other provisions etc and claim damages, other reliefs. Please suggest.
Anirudh (Expert) 21 September 2014
First send a legal notice after consulting a local lawyer.
After expiry of the notice period, file a suit for (i) recovery of the surplus amount (ii) declaration that the entire education stands repaid with applicable interest and that nothing is due from you to the bank.

Before that, you have to ensure that you intimated the Bank about the death of your father and also requested the bank to claim the insurance amount, and have documentary evidence to prove that you did that. In the absence of this documentary evidence, you will have difficulty in your claim.
Rajendra K Goyal (Expert) 21 September 2014
Whether both the borrowers are alive?

Have you read the terms and conditions of the proposal.

Generally this is low premium policy in which nothing is payable on maturity. Once again confirm the terms. If it is group policy SBI would provide policy no. to you.

If any of the borrower has expired, have you lodged the claim?

Generally on expiry of the borrower the claim payable up to loan outstanding by the Insurance co. (SBI Life - a separate entity then SBI)
ajay sethi (Expert) 21 September 2014
agree with experts
Kumar Doab (Expert) 21 September 2014
You have posted that your father has deceased.

Have you submitted the death intimation and death claim?

If yes you are certainly entitled to amount ( Death Claim-Loan Amount as on date).

The Bank supplied the copy of proposal form, insurance policy, assignment deed or not? It has to supply the authenticate copy.

The CPIO has maintained studied silence and you can proceed against him.

M/s SBI has a stake in M/s SBI Life Insurance...................

M/s SBI can not insist on buying life insurance (Term Plan) from its sister concern only.

Did M/s SBI confirm to whom the claim form is to be submitted; M/s SBI or M/s SBI Life........................and did it clarify if copy of policy is not supplied how can you submit the claim?

In case of transgression and deficiency by both entities you shall have a remedy.

Devajyoti Barman (Expert) 21 September 2014
agree with Mr Doab.
T. Kalaiselvan, Advocate (Expert) 29 September 2014
Expert Mr. Kumar Doab has very rightly observed the valid details that are to be confirmed. First clarify all the queries raised and confirm the details so that you will come to know if you are eligible for claiming the insurance death claim amount.

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