The Namakkal District Consumer Disputes Redressal Commission (DCDRC) has ordered Indian Overseas Bank (IOB) to pay ₹5 lakh in compensation to M. Anu Prasad, a resident of Tiruchengode, for transferring the loan to a private company for recovery even after the loan was repaid. The loan, taken in 2007 for ₹2.57 lakh, was repaid in 2017 by Anu Prasad and his father, R. Manoharan, after completing the degree. Despite this, IOB did not withdraw the court case, and in 2019, the civil court ordered Anu Prasad and Manoharan to pay ₹5.16 lakh to the bank.
IOB then transferred the loan to a private asset reconstruction company (ARC) for recovery in 2024, despite issuing a No Objection Certificate (NOC) earlier. Anu Prasad received calls and messages from the ARC demanding ₹7 lakh, which led him to file a case against IOB and ARC at the DCDRC in August 2024. The DCDRC commissioner, V. Ramaraj, ordered IOB to pay ₹5 lakh as compensation for mental agony and directed the bank to issue a letter apologizing for the mistake. The DCDRC also directed the ARC not to take any action to recover the loan amount from Anu Prasad.
If IOB fails to comply with the order within four weeks, it will attract an additional compensation of ₹5,000 per day. The order is a significant victory for Anu Prasad, who had to suffer mental aggression and harassment due to IOB’s botched handling of the loan. The decision is a reminder of the importance of transparency and accountability in financial institutions, and the need for effective redressal mechanisms for customers who are cheated by banks.