On August 17, the National Consumer Disputes Redressal Commission (NCDRC) ruled against IDBI Bank Ltd in a case involving a ‘deep discount bond’.
The NCDRC asked the bank to pay ₹80,786, interest of 9 per cent for the period dating from April 1, 2017, and the litigation cost of ₹50,000 to the complainant Sadananda Das.
The bond purchased by Das for ₹2,700 was supposed to mature to ₹1 lakh in 25 years. However, when Das exercised the redemption option, he received only ₹19,214.
The bank had notified its ‘call option’ through newspapers on August 19, 2001. It urged subscribers to redeem their bonds by surrendering their original bond certificates, with interest payable at the savings bank rate after March 31, 2002 — the call option date.
In addition to sending a reminder in May 2009, the bank claimed it sent a call notice via post to the respondent on August 22, 2013, at the recorded address.
Later, it was discovered that the respondent’s address on the deep discount bond was incorrect, leading to misdelivery of the notice.
In a similar case (IDBI Bank Ltd versus Surjit Kaur), the NCDRC had ordered the bank to pay Kaur the full-face value of her deep discount bond series I, issued in 1992, which was ₹1 lakh, along with 9 per cent interest. Kaur had purchased the bond for ₹2,700, and it was supposed to mature in 25 years.
However, when she tried to redeem it after the maturity period, the bank claimed that it had already been redeemed in 2001. The NCDRC determined that IDBI’s newspaper notices were ineffective, and that they should have used registered posts. Consequently, they ruled in favour of Kaur, entitling her to the full bond face value of ₹1 lakh, along with interest. IDBI Bank refused to comment on the matter.