Allahabad High Court orders SBI to refund Rs 19.90 lakh deducted from widow's FD

In a significant ruling, the Allahabad High Court has ordered the State Bank of India (SBI) to return funds deducted from a woman's fixed deposit (FD). According to reports from Aaj Tak, the bank had withdrawn Rs 19.90 lakh from her account to recover a personal loan taken by her late husband.

Upon hearing the case, the court determined that the woman had no legal connection to the loan in question. She was neither a co-borrower in the loan agreement nor had she provided any guarantee for the debt. Based on this, the court deemed the bank's actions inappropriate.

The High Court has directed the bank to refund the entire amount of Rs 19.90 lakh to the woman. Additionally, the bank has been ordered to pay appropriate interest on this amount.

The issue arose when the bank utilized the wife's savings to settle the outstanding loan following the death of her husband. The woman sought legal recourse and approached the High Court to challenge the bank's decision.

In its order, the court clarified that the assets or savings of a family member cannot be seized to recover an individual's personal loan without a valid legal basis.

This verdict serves as a relief for individuals who face arbitrary recovery practices by banking institutions. The court's stance makes it clear that banks must adhere strictly to established regulations when conducting recovery processes.

Consequently, the bank is now required to comply with the court's order and return the woman's funds along with the accrued interest. This case has once again sparked a discussion regarding loan recovery procedures within the banking sector.