SURAT: The Navsari Consumer Disputes Redressal Commission (CDRC) has held Bank of Baroda accountable for not processing a home loan borrower’s application for a Pradhan Mantri Awas Yojana (PMAY) subsidy. The bank has been ordered to pay Rs 3.75 lakh to the borrower, Kiran Tandel, along with 9% interest.
This compensation includes Rs 2.35 lakh for the PMAY subsidy that was not received and Rs 1.4 lakh for additional interest incurred on the home loan. The commission also awarded Rs 5,000 for harassment and litigation costs.
The commission dismissed the bank’s argument that the subsidy was a government matter and that it should not be held liable for its non-disbursal. It emphasized that the bank had a responsibility to properly process the consumer’s subsidy application.
Tandel and his wife approached Bank of Baroda in 2019 for a home loan under the PMAY scheme. Following the bank’s guidance, Tandel completed all necessary documentation with their associated advocate and architect. On June 4, 2019, the bank approved a Rs 17.70 lakh ‘Baroda Gruh Loan – PMAY Loan’.
After securing the loan, Tandel consistently paid an EMI of Rs 15,361 and completed the mortgage deed, as well as purchased loan insurance. However, he never received the expected PMAY subsidy.
On February 28, 2023, Tandel emailed the bank for information regarding the subsidy, only to receive a vague reply indicating that the matter was “in progress.” Dissatisfied, he sent five reminders in March 2023, yet received no updates on the application status.
Tandel then approached the Navsari CDRC, seeking compensation for the Rs 2.35 lakh subsidy, reimbursement of Rs 1.40 lakh in extra interest, and damages for harassment.
During the proceedings, Tandel’s attorney argued that the bank had negligently failed to submit the subsidy application to the government. They added that if any issue had existed with the PMAY application, the bank wouldn’t have initially approved the loan under the PMAY scheme.
The bank claimed in its defense that it only facilitated the loan and was not responsible for sanctioning the subsidy, which it argued is issued by the government. Additionally, it contended that the borrower violated PMAY eligibility by stating he did not own more than two properties.
In response, the commission noted that the PMAY application clearly showed Tandel had declared he didn’t own any immovable property. Furthermore, the bank failed to provide any evidence of actions taken to process the subsidy application with the government.
The commission concluded, “The bank neither informed the consumer of any application defects nor provided records showing efforts to pursue the subsidy claim. Continued collection of loan payments indicated the application was valid.”
Ultimately, the commission ruled that the consumer lost the subsidy solely due to the bank’s failure to process the application and directed it to pay Rs 2.35 lakh for the PMAY subsidy, Rs 1.4 lakh for additional interest, along with 9% interest and Rs 5,000 for harassment and legal costs.
