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SOMETIMES ago I had written about an unemployed youth whose dream of earning a livelihood by buying an autorickshaw was shattered because the bank that had sanctioned the loan to buy the vehicle under the Prime Minister’s Rozgar Yojana had eventually failed to release the amount. What was worse was that the bank—Gobindpur (Orissa) branch of State Bank of India—had refused to comply with the orders of the consumer court at the district level and later, the state level. By the time the apex court took up the revision petition, nine years had already passed, and though the court expressed its unhappiness over the way welfare schemes framed by the Central Government could not be implemented because banks failed to release loans, it did not give any direction to the bank concerned. Nor did it award any stiff punitive damages. It merely asked the bank to pay the consumer a compensation of Rs 10,000. (The branch manager, SBI, vs Nirakar Sahoo, General Manager, RP no 1055 of 2002, decided in 2007). In essence, it was a case of the consumer justice system, too, failing the client. Now more than a year later, in a similar case, the apex court has given a more positive verdict. It has not only upheld the order of the lower courts directing the bank to release immediately the loan amount of Rs 47,500 sanctioned towards opening a small grocery shop, but has also asked the bank to pay costs of Rs 10,000 for dragging the client to the apex court without any justification. It has also asked the bank to recover this and the Rs 5,000 awarded as compensation by the state commission (a total of Rs 15,000) from the officials responsible for denying the loan to the youth. The bank has also been asked to report compliance of the order before the registrar of the commission without fail. In addition, the court has directed that its order be sent to the chairman and the managing director of the bank, besides the secretary, Ministry of Micro, Small and Medium Enterprises, Government of India, which oversees the implementation of the Prime Minister’s Rozgar Yojana. The case of the educated, unemployed and physically challenged youth goes back to 2000 when he was sanctioned a loan of Rs 50,000 to start a kiryana shop by the Madhubani branch of Canara Bank. Under the rozgar yojana., Binay Kumar Jha had been selected and trained by the district industries centre, following which it had recommended him to the bank for the loan. As per the requirements, Jha had not only deposited 5 per cent of the loan amount, but had also got a ‘no-objection’ certificate from eight other banks operating in the area, to prove that he had not taken any other loan nor had defaulted on any other loan. However, the bank did not release the loan, even after the district forum directed it to do so in 2004. Dismissing the reasons given by the bank for not releasing the loan as ‘flimsy’, the state commission, Patna, asked the bank in 2005 to release the amount immediately, failing which, to pay Rs 1,000 per month beginning February, 2001, till compliance of its order. It also awarded Rs 5,000 as compensation and Rs 1,000 as costs. This was challenged by the bank before the national disputes redressal commission. Dismissing the appeal, the apex court said the bank’s attitude highlighted "sheer callousness of the bank’s approach to the implementation of a socially beneficial self-employment generation scheme of the government for the educated unemployed in the economically disadvantaged sections of society." Here is a bank owned entirely by the Central Government and is, thus, bound by the state’s socio-economic welfare policies, programmes and schemes, including the instructions regarding priority sector lending, as enunciated by the RBI from time to time. Loans for small business ventures under the PMRY are in the category of priority sector lending, and the banks are required to advance 40 per cent of their total lendings to the economic activities categorised as such. Yet, the bank did not release the loan, even in instalments, despite letters/reminders from the office of the District Magistrate. To these letters the bank did not even care to reply. Commenting that it was only after its directions dated March 6, 2006, the bank had finally paid the loan amount into the account of the consumer. The court said the bank was guilty of not just deficiency in service but also administrative misfeasance. (Canara Bank, Madhubani, v. Binay Kumar Jha, RP no 3210 of 2005, decided on 14-10-2008).
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