Bank failed to pay Rs 100 for insurance renewal, family's Rs 2 lakh claim rejected after son's death; SBI ordered to pay Rs 2.1 lakh

A consumer commission in Aligarh has directed State Bank of India (SBI) to pay Rs 2 lakh to a woman whose son died after the bank failed to deduct a Rs 100 insurance renewal premium despite sufficient funds in his account. The insurer had rejected the family's claim, arguing that it had not received the premium and had not issued a policy covering the period in question.

In its order pronounced on October 9, 2026, Aligarh District Consumer Disputes Redressal Commission held SBI responsible for failing to deduct and transfer the renewal premium. It directed the bank to pay the insurance amount, along with interest at 7% per annum, Rs 5,000 as compensation for harassment and Rs 5,000 towards litigation expenses.

What happened to insurance cover?

According to the complaint, Sheela Devi's son, Shiv Raj Singh, opened an account with SBI in 2014 and enrolled in an insurance scheme offering cover of Rs 2 lakh. He paid a premium of Rs 100, which appeared as a deduction in his bank statement on October 18, 2014.


The next policy period ran from October 18, 2015, to October 17, 2016. Shiv Raj deposited Rs 500 into his account on October 15, 2015. His balance remained above Rs 100 until November 22, 2015, according to the commission's findings.

However, SBI did not deduct the next Rs 100 premium when the renewal period began.

Shiv Raj died on January 11, 2016. Sheela Devi was named as his nominee under the insurance arrangement.

Why was claim rejected?

After Shiv Raj's death, his father submitted an insurance claim application on April 4, 2016, followed by another application on April 6. The family did not receive the insurance payout.

The insurer argued that it had not received the renewal premium and had not issued a policy covering the disputed period. On that basis, it denied liability for the claim.

This left the family facing a dispute over a relatively small premium, even though the original insurance cover was worth Rs 2 lakh.

What did consumer commission say?

The commission examined the account details and found that Shiv Raj had sufficient funds for the Rs 100 renewal premium. It held that SBI should have deducted and transferred the amount on October 18, 2015, or within a month of the renewal date.

The bank's failure to make the deduction amounted to deficiency in service, the commission held. Its reasoning centred on SBI's responsibility to carry out the premium deduction when sufficient money was available in the account.

SBI did not file a written statement despite being served notice, and proceedings against the bank continued ex parte. The insurer, meanwhile, maintained that it had not received the premium for the disputed policy period.

How much must SBI pay?

The commission directed SBI to pay Sheela Devi:

• Rs 2 lakh towards insurance cover
• 7% annual interest on the amount, including pendente lite and future interest as ordered
• Rs 5,000 as compensation for harassment
• Rs 5,000 towards litigation expenses

The compensation and litigation costs together amount to Rs 10,000, taking the total principal amount ordered to Rs 2.1 lakh, before applicable interest.