Nikil Kanchan 11 March 2016

Debit branch penalty applied to recurring deposit interest

I had an Recurring deposit with SBI which matured recently. I missed to pay 3 installments during the starting six months of the RD tenure so the branch has charges a 'Debit Branch Penalty' i.e. 75% of the interest earned as the penalty for the 3 payments missed.

I raised the issue with the branch manager and she herself had to understand the calculation of the penatly from a senior SBI official since the policy is unclear. The policy is as under:

Whenever a depositor fails to pay the installment on due date for three consecutive months the account shall not be closed and service charge of Rs 10/- is applicable. The penalty charged on delayed payment of instalment shall be
i) Penalty in case of delay in payment of installment of RD of 5 years or less shall be Rs 1.50 for every Rs 100 per month.
ii) Such penalty shall be Rs 2.00 for every Rs. 100 per month for the account on more than 5 years.

I want to pursue the case in the district consumer forum as their policy terms are unclear and nevertheless, any policy doesnt justify deduction of 75% of interest when out of 12 installments, 9 have been paid regularly.

Should I pursue in court. The interest penalty is Rs25,000.

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5 Replies

ROHIT SHARMA (Legal Advisor ) 11 March 2016

1. First file a complaint with the Banks Ombudsman. They will determine what is the exact policy and will mitigate your harship.

2. If you are still aggrived with the decision of the Banks Ombudsman then you can file a complaint before the consmer forum seeking compensation for the exzarated penatly imposed upon you.

A R S SARMA 14 August 2017

I had the same experience with SBI recurring deposit which was matured on 10th. Aug. 2017. In this case I have been paying continuously from 10-8-15 to 10-8-17 for 24-month period RD @ 5,50,000/- per month instalment . Recently on maturity when I download the statement of account for 24-month period, all the entries were correctly entered in the bank system, including the maturity interest and closing balance, TDS deductions etc., but to my surprise there is another entry"DEBIT BRANCH PENALTY" of Rs.66,000/- with out any note or clarificatin in the entry. While once again verifying all the RD debit entries of 24-instalments, I found that one entry payment was delayed by meary 4-days from the date of standing instructions to actual debit in the system. The Branch could not give any clarification, I am sending this information to expert panal of Lawers, who can answer to me the correct logic behind this DEBIT BRANCH PENALTY.

FURTHER another deposit of my son's RD which was matured on 12-8-17, has the same problem while downloading the statement of account , I found that out of 12-RD entries all the payments were correctly paid and the maturity interest was also correctly credited, but another entry visible is "DEBIT BRANCH PENALTY" which has no relavent in this RD, since all the instlments were corrected paid with standing instructions, and not even one day default was there, but still this entry appeared. RD for every month is Rs.27,600/-X 12-instalments and accured RD interest is Rs.13,218/- for which the BRANCH PENALTY WAS IMPOSED Rs. 3,312/- without any referrence or relavence. Let these instances are very important in nature of banking system, let the higher authorities of State Bank of India may interfere to findout where exactly the system went wrong. For the interest of general public I am just bringing this information which has to be clarified by the renowned Advocates and Lawyers and also by SBI higher officials POSTED BY A.R.S.SHARMA-INDIA.

1 Like

Tarun 28 January 2018

What is the penalty for default in installment payment?

SHREESHA HOLLA 10 May 2019

I had same issue. Bank is charging penalty under the heading of " Debit branch penalty". This has to be sorted out. Can anybody throw some light on this?

Vivek Anandan 24 May 2020

Originally posted by : A R S SARMA
	I had the same experience with SBI recurring deposit which was matured on 10th. Aug. 2017. In this case I have been paying continuously from 10-8-15 to 10-8-17 for 24-month period RD @ 5,50,000/- per month instalment . Recently on maturity when I download the statement of account for 24-month period, all the entries were correctly entered in the bank system, including the maturity interest and closing balance, TDS deductions etc., but to my surprise there is another entry"DEBIT BRANCH PENALTY" of Rs.66,000/- with out any note or clarificatin in the entry. While once again verifying all the RD debit entries of 24-instalments, I found that one entry payment was delayed by meary 4-days from the date of standing instructions to actual debit in the system. The Branch could not give any clarification, I am sending this information to expert panal of Lawers, who can answer to me the correct logic behind this DEBIT BRANCH PENALTY. FURTHER another deposit of my son's RD which was matured on 12-8-17, has the same problem while downloading the statement of account , I found that out of 12-RD entries all the payments were correctly paid and the maturity interest was also correctly credited, but another entry visible is "DEBIT BRANCH PENALTY" which has no relavent in this RD, since all the instlments were corrected paid with standing instructions, and not even one day default was there, but still this entry appeared. RD for every month is Rs.27,600/-X 12-instalments and accured RD interest is Rs.13,218/- for which the BRANCH PENALTY WAS IMPOSED Rs. 3,312/- without any referrence or relavence. Let these instances are very important in nature of banking system, let the higher authorities of State Bank of India may interfere to findout where exactly the system went wrong. For the interest of general public I am just bringing this information which has to be clarified by the renowned Advocates and Lawyers and also by SBI higher officials POSTED BY A.R.S.SHARMA-INDIA.