SBI chastised for legal action against deceased debtor

NEW DELHI – The State Bank of India (SBI) has faced criticism in a Delhi court for initiating a recovery suit against a deceased individual, a case that has highlighted significant lapses in the bank’s internal processes. District Judge Surinder S Rathi addressed the issue on November 2, 2023, when it came to light that SBI filed a lawsuit to recover Rs 13.51 lakh plus interest from Siya Nand, who had passed away two years prior to the legal action.

The court’s investigation revealed that SBI had neglected to verify the status of the debtor before proceeding with the lawsuit. This oversight led to notices being issued to the bank’s branch manager and the general manager responsible for law, recovery, and litigation. The branch manager, after tendering an unconditional apology, was discharged from his notice. However, this did not absolve SBI from its procedural failures.

In response to the court’s censure, SBI acknowledged its mistake and committed to taking disciplinary measures against the officials involved. The bank also agreed to integrate the chief registrar of births and deaths’ database into its standard operating procedures to prevent such incidents in the future.

Judge Rathi highlighted the absence of clear guidelines within SBI’s standard operating procedures for confirming whether a debtor is deceased. He emphasized that as a leading national bank, SBI should set an example in efficiency, professionalism, transparency, and ethics.

Despite these shortcomings, the court chose not to impose additional costs on SBI beyond the forfeiture of court fees already paid, recognizing the bank’s willingness to correct its course and ensure such errors do not recur. The recovery suit was ultimately dismissed due to Indian laws that prohibit lawsuits against deceased persons.

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