Canara Bank charges ‘excess’ interest on home loan, father and son win Rs 1 lakh

A Hyderabad consumer commission has directed Canara Bank and two of its officials to pay a father-son duo Rs 99,996, after finding that the bank charged excess interest on their Rs 20 lakh housing loan and failed to refund the entire amount. The commission noted that the bank had initially shared a calculation sheet showing excess charges of around Rs 1.32 lakh but later disputed its own calculation. 

President M Ram Gopal Reddy, along with members D Sreedevi and J Shyama, was hearing a complaint filed by a father and son who took a housing loan in 2014 and alleged that Canara Bank had collected excess interest from them.

“There is deficiency in service on the part of the opposite parties (Canara Bank and its officials) by collecting excess interest from the complainants (father and son), not refunding that amount and also disowning their statement of account issued by themselves,” the October 7 order read. 

Repaid loan, but excess interest not refunded

The complainants are joint borrowers of a Rs 20 lakh housing loan sanctioned in August 2014 at a floating interest rate. The EMI was Rs 24,922, commencing on September 30, 2014. They said they repaid the entire loan before the scheduled repayment period ended and closed the loan account.

The complainants alleged that the bank had collected around Rs 1.32 lakh in excess interest and charges. After several requests, the bank refunded only Rs 55,254 in August 2024, in addition to an earlier refund of Rs 7,028, leaving Rs 69,996 unpaid. They also alleged that the bank had failed to revise their EMIs in accordance with RBI guidelines.

Aggrieved, they approached the commission seeking a refund and compensation.

Canara Bank’s defence

Canara Bank, through advocate Manav Gecil Thomas, submitted that the complainants themselves state that the loan was sanctioned and the rate of interest was of a floating nature and not fixed. It was added that means, the interest rate would never be fixed. 

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The bank maintained that it had sanctioned the loan and collected payments in accordance with the applicable guidelines. It said that, following the complainants’ representations, it reviewed the account, verified the applicable interest rates against its circulars and found that Rs 55,254 had been collected in excess. The bank said this amount had already been credited to the complainants’ account.

‘Disowned its own calculation sheet’

The commission found that the bank itself had prepared the calculation sheet sent to the complainants in June 2024, showing excess collection of around Rs 1.32 lakh. It noted that the bank later claimed the sheet was incorrect and asked the commission to rely on its revised calculation instead.

It also noted that the bank has pointed out to the commission to consider the latest calculation sheet filed by them. “This act of the opposite parties (bank and its officials) clearly establishes the deficiency in service on the part of the opposite parties,” it added.

The commission clarified that a bank maintaining a loan account cannot simply claim that its subsequent calculation is correct. “The complainants produced the bank’s own contemporaneous statement showing a particular calculation, and the bank subsequently seeks to disown that statement as erroneous,” it added.

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It noted that the document relied on by the complainants had originated from the bank and purported to record transactions in their loan account and it was not a statement prepared unilaterally by the borrowers.

Holding the bank and its two officials jointly and severally liable, the commission directed them to refund an amount of Rs 69,996 and pay Rs 20,000 towards compensation for causing inconvenience and mental agony to the complainants. The bank was also directed to pay an amount of Rs 10,000 within 45 days. 

Takeaway

This ruling highlights the need for banks to maintain transparent loan calculations, explain interest-related adjustments and refund excess collections.

Aggrieved consumers may contact the consumer helpline in their respective states (Telangana: 0771-2582902) or call the National Consumer Helpline at 1915 for assistance.