Doctor Wins Legal Battle Over Dropped CIBIL Score, Receives Rs 2.6 Lakh

Dr. Bhalla's bank statement showed a payment of Rs 5,040 to the credit card issuer, which he used as proof to start a long battle for justice
Dr. Bhalla then received a crucial letter from ICICI Bank's Vadodara branch in March 2013. (Representational image: Unsplash)
Dr. Bhalla then received a crucial letter from ICICI Bank's Vadodara branch in March 2013. (Representational image: Unsplash)

In 2012, Dr. Bhalla from South Bombay, despite fully paying his credit card debt in 2003, found out that his bank had reported him as a defaulter, causing his CIBIL score to drop significantly.

This drop in CIBIL score led AMEX to reduce his credit card limit by 22.5%, from Rs 3.25 lakh to Rs 2.48 lakh, and deny him another credit card. When he looked into the issue, he discovered that a Rs 5,640 credit card debt from 2003 was still marked as unsettled in 2012. This debt had increased to Rs 2.17 lakh with interest.

Dr. Bhalla's bank statement showed a payment of Rs 5,040 to the credit card issuer, which he used as proof to start a long battle for justice. He filed complaints with the Banking Ombudsman, the district consumer commission, the state consumer commission, and eventually the National Consumer Disputes Redressal Commission (NCDRC).

Initially, he contacted the bank's nodal officer about the unpaid debt but got no response. He then filed a complaint with the Banking Ombudsman, providing evidence of the payment. The bank's Nodal Officer claimed they had not received the payment and directed him to take the matter up with Axis Bank, which had a tie-up with Standard Chartered Bank. Dr. Bhalla had no relationship with Axis Bank.

Dr. Bhalla then received a crucial letter from ICICI Bank's Vadodara branch in March 2013. The letter confirmed that his payment had been made to Standard Chartered Bank via UTI Bank (now Axis Bank) and included a copy of the check dated February 3, 2003. This letter became vital evidence.

After receiving this evidence, Standard Chartered Bank acknowledged the payment. The Banking Ombudsman closed the complaint in March 2013, but this did not fix the damage to Dr. Bhalla’s credit history or improve his credit score. The doctor sent a legal notice to Standard Chartered Bank, but the bank did not respond.

The NCDRC noted that the mistake was on the part of Standard Chartered Bank and that the bank misled the Banking Ombudsman. (Representational image: Unsplash)
The NCDRC noted that the mistake was on the part of Standard Chartered Bank and that the bank misled the Banking Ombudsman. (Representational image: Unsplash)

He then filed a case against the bank with the district consumer commission, which was dismissed in January 2016. He appealed to the Mumbai state commission, which accepted the case in July 2019. The case concluded with the NCDRC ruling in favor of Dr. Bhalla on April 9, 2024.

The NCDRC ordered the bank to pay Rs 2 lakh as compensation for service deficiency and mental agony, plus Rs 10,000 for litigation costs, with 6% interest from July 30, 2019. If the bank decides to pay, the total amount, including interest, will be Rs 2.6 lakh.

The NCDRC noted that the mistake was on the part of Standard Chartered Bank and that the bank misled the Banking Ombudsman. The incorrect reporting had severely impacted Dr. Bhalla's CIBIL score and branded him a defaulter, causing his credit limit with American Express to be lowered.

Kalindhi Bhatia, a partner at the BTG Advaya law firm, stated that banks can be held liable if their actions negatively impact a customer's credit score. The Credit Information Companies (Regulation) Act, 2005, requires credit institutions to ensure accurate credit information reporting. Customers can seek redress through the Consumer Protection Act and the Banking Ombudsman.

Shiju PV, Senior Partner at IndiaLaw LLP, emphasized that customers remain liable for their debt despite errors by the bank. However, customers are not responsible for extra charges like penalties and interest if the error is proven to be the bank’s fault.

(Input from various sources)

(Rehash/ Susmita Bhandary/MSM)

Dr. Bhalla then received a crucial letter from ICICI Bank's Vadodara branch in March 2013. (Representational image: Unsplash)
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