SBI Ordered To Pay Rs 2 Lakh After PMSBY Premium Was Not Deducted Despite Sufficient Balance

A consumer dispute in Uttarakhand has once again highlighted how small lapses in auto-debit insurance schemes can create major problems for policyholders and their families. In a recent ruling, the Uttarakhand State Consumer Disputes Redressal Commission directed the State Bank of India (SBI) to pay Rs 2 lakh insurance compensation after it failed to deduct a Pradhan Mantri Suraksha Bima Yojana (PMSBY) premium of just Rs 12 from a customer’s account, despite sufficient balance being available.

The commission held that the bank could not escape liability merely because the insurance premium had not been debited before the customer’s death. The order also sends out a message that banks cannot simply wash their hands of responsibility in cases where insurance premiums are not deducted because of lapses at the operational level, according to a recent The Indian Express report.

Insurance Cover Lapsed After Premium Was Not Debited

According to the case details, the deceased woman, Kavita Devi, had enrolled under PMSBY through SBI in May 2015. The scheme provides accidental insurance coverage of Rs 2 lakh in case of accidental death and lower compensation in cases involving partial disability.

The annual premium under the scheme at that time was Rs 12 and was supposed to be automatically deducted from the linked savings account every year. The premium for the first two years had reportedly been deducted successfully from her account.

However, during the 2017-18 policy year, the premium was not debited even though the account reportedly had more than enough money to cover the amount. Consumer commission records reportedly showed that the account had a balance of over Rs 3,300 at the relevant time.

The issue became serious after Kavita Devi suffered fatal injuries in February 2018 while working in a forest area. She later died during treatment in March 2018. Following her death, her husband sought the insurance claim under PMSBY.

The claim, however, ran into trouble because the policy had technically lapsed after the premium was not deducted for that year. SBI reportedly argued before the commission that the insurance cover was inactive at the time of death because the premium had not been paid.

Consumer Commission Pulls Up SBI

The Uttarakhand consumer commission did not agree with SBI’s defence. It observed that the bank had failed to deduct a very small premium amount despite there being sufficient balance in the customer’s account.

The commission reportedly termed this a “clear-cut deficiency in service” and upheld an earlier district consumer commission order directing SBI to pay the insured amount to the deceased woman’s husband.

Apart from the Rs 2 lakh insurance amount, the commission also upheld payment of interest at 6 per cent annually from March 2019 till realisation, along with litigation expenses of Rs 5,000.

Importantly, the commission also noted that SBI could not produce evidence showing that the customer had been informed about any requirement relating to fresh Know Your Customer (KYC) formalities or branch visits that may have prevented premium deduction.

Why This Matters For PMSBY Subscribers

PMSBY is among India’s largest low-cost accident insurance schemes and is linked directly to savings bank accounts through an auto-debit system. Millions of account holders rely on banks to deduct premiums automatically every year.

The dispute also brings attention to a common issue in auto-debit insurance schemes. In many cases, customers assume the bank will continue deducting the yearly premium on its own and do not check whether the amount has actually gone from the account.

Those enrolled in PMSBY and PMJJBY are often told to check their bank passbooks, account statements, or mobile alerts around the renewal period to ensure the premium has been deducted properly.

The ruling may now be cited in other disputes where account holders had sufficient balance, but the premium was not deducted because of lapses in the banking process.

FAQs

Can a bank be held responsible if an insurance premium is not auto-debited despite sufficient balance?

Yes. In this case, the consumer commission held SBI liable because the account had enough balance, yet the PMSBY premium was not deducted due to a banking lapse.

What should PMSBY or PMJJBY subscribers check every year?

Subscribers should verify passbooks, bank statements, SMS alerts, or mobile banking records around the renewal period to ensure the premium has actually been debited.

What did the consumer commission say in this case?

The commission termed SBI’s failure to deduct the Rs 12 premium a “deficiency in service” and directed the bank to pay Rs 2 lakh compensation along with interest and litigation costs.