The Amritsar District Consumer Commission has held a bank liable for deficiency in service after it failed to inform an account holder that the annual premium for her Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) cover could not be deducted because of insufficient balance.
President Jagdishwar Kumar Chopra and member Mandeep Kaur directed the bank to pay ₹1.5 lakh as compensation to the complainant, whose daughter later died in a road accident, along with ₹10,000 towards litigation costs.
The Commission found that although the bank had attempted to deduct the annual insurance premium, it did not alert the account holder when the transaction failed and was reversed.
Insurance Cover Lapsed After Failed Debit
According to the complaint, the complainant’s daughter maintained an account with the bank and was enrolled under the central government-backed PMJJBY life insurance scheme. The annual premium was being deducted automatically from her account.
After her death, the complainant approached the bank to claim the insurance benefit. He was told that the premium for 2021-22 had not been paid and that the policy had therefore lapsed.
The bank statement showed that an attempt had been made to deduct the annual premium of ₹330. At the time, however, the account contained only ₹223.42, leaving a shortfall of ₹106.58. The debit was consequently reversed.
The complainant stated that his daughter subsequently deposited ₹1,000 into the account, but the bank neither renewed the policy nor informed her that the earlier premium deduction had failed.
Bank Cited Insufficient Balance
The bank acknowledged that the premium could not be deducted because sufficient funds were unavailable in the account. It contended, however, that maintaining an adequate balance was the responsibility of the account holder and that the insurance company had not received the premium.
The Commission rejected the bank’s attempt to completely distance itself from the failed transaction.
It noted that the account holder had enrolled in an automatic premium deduction arrangement and was relying on the banking system to deduct and remit the amount within time.
The Commission observed that once a bank undertakes to operate an auto-debit facility, it cannot absolve itself merely by pointing to the failure of a computer-generated system.
It further noted that the bank knew both that the account lacked sufficient funds when the deduction was attempted and that the debit entry had subsequently been reversed. In those circumstances, the Commission said, the bank was required to inform the account holder that the renewal transaction had failed.
Holding that the omission amounted to deficiency in service, the Commission ordered the bank to pay ₹1.5 lakh in compensation and ₹10,000 as litigation costs.
The ruling underscores that where an insurance premium is linked to an automatic bank debit, the bank must inform the account holder when the deduction fails, particularly where non-payment may result in the insurance cover lapsing.
