4 min readNew DelhiJun 30, 2026 06:30 PM IST
A District Consumer Commission in Andhra Pradesh directed a loan company, IBL Bank Loans, to refund a Rs 15,000 processing fee and return the complainant‘s property documents, after it failed to sanction a Rs 15 lakh loan for his son’s marriage despite collecting the fee.
A bench of president Chintalapudi Kishore Kumar and member Sreelakshmi Rayala also ordered to pay Rs 5,000 compensation plus Rs 2,000 litigation costs to the complainant.
“The complainant established the defect in service on the part of the opposite party bank for not sanctioning the loan even after receiving the processing fee of Rs 15,000. The complainant is entitled to the process fee amount of Rs 15,000 along with interest from the opposite party, and also photocopies of the apartment house flat documents,” the commission said on June 4.
The order added that as the opposite party bank failed to sanction the loan amount for the purpose of the marriage of the complainant’s son in time, even after payment of the process fee, the complainant suffered a lot of mental agony for which he is entitled to compensation and costs.
Loan promise broken, ree retained
The complainant applied for a loan for his son’s marriage, seeing publicity through media and newsprint by way of pamphlets that the opposite party bank organisation would give loans to needy persons at a cheaper rate of interest.
Having believed the publicity, the complainant is in need of money for the marriage purpose of his son and contacted the manager of the opposite party in the first week of December 2022 to sanction a loan of Rs 15 lakh.
Accordingly, as per the directions of the opposite party, the branch manager sent the technical manager, who approached the complainant and, after verifying all the papers submitted by the complainant, the technical manager informed the complainant that they would arrange the said amount of Rs 15 lakh for him., and asked the complainant to pay an amount of Rs15,000 towards process fee and in case the loan is not sanctioned, the said process fee amount will be returned to the complainant.
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Accordingly, the complainant paid the said process fee amount, and the bank received it, and the branch manager promised that the said loan would be sanctioned within 15 days.
Further, the technical manager has taken away the photocopies of the documents belonging to the complainant, and till today, the documents are with the opposite party, but the opposite party did not sanction the loan amount.
As the complainant needed money and the opposite party failed to sanction the loan amount, the complainant borrowed the amount from HDFC Bank by way of a loan. Thereafter, several times the complainant contacted the opposite party by phone to return the said process fee amount of Rs15,000 taken from him along with the apartment flat house documents. The complainant claimed that but till today, the opposite party has not returned those documents which clearly show the cheating manner.
Defect in service: Order
- After receiving the registered notice from this commission, in this complaint, the opposite party bank did not choose to contest the case by denying the allegations made against it in the complaint.
- This commission does not find any reasons to disbelieve the oral and documentary evidence adduced by the complainant.
- The oral and documentary evidence adduced by the complainant clearly established that there is a defect in service on the part of the opposite party for not sanctioning the loan to the complainant even after receiving the process fee amount of Rs 15,000.
Significance of ruling
This judgment reinforces that banks cannot collect processing fees and retain customers’ documents without fairly processing loan applications or refunding the amount if the loan is not sanctioned. It affirms that such conduct amounts to a deficiency in service, ensuring greater accountability and protecting consumers from unfair and misleading banking practices.
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Consumers facing similar grievances may contact the consumer helpline in their respective states (Andhra Pradesh helpline: 0866-2551431) or dial the National Consumer Helpline at 1915 for assistance.