Fines ICICI Bank and SBFC Finance for procedural failures, aggressive recovery tactics
The loan was sanctioned to the complainant’s father in May-June 2022. REPRESENTATION PIC/ISTOCK
In a rare and strongly-worded directive exposing deep flaws in India’s co-lending system, the Reserve Bank of India (RBI) ombudsman (an independent official, often government-appointed, who investigates and resolves complaints from citizens or consumers against public bodies or companies) has held ICICI Bank and SBFC Finance Ltd guilty of procedural failures, KYC lapses, and insurance concealment in a loan issued to a deceased borrower’s family. The order followed a conciliation hearing on September 1, 2025, in response to a complaint filed by Ahmed Parkar.
The 2022 case
The case relates to a 2022 loan against property. Abdul Wahab Parkar, 65, was sanctioned Rs 13 lakh under an ICICI-SBFC co-lending model. In the loan application, the co-applicants’ names and signatures present were his son, Ahmed Parkar, and his daughter-in-law. The loan was sanctioned in May-June 2022 and Abdul died on December 26, 2023.
Following his demise, recovery agents repeatedly visited the family’s Santacruz home — where only women resided — demanding EMIs without providing loan documents. The agents threatened them with property seizure and used aggressive recovery tactics. Ahmed filed an RBI CMS (Complaint Management System) complaint against SBFC and ICICI on November 24, 2024.
Ombudsman steps in
On September 1, 2025, a conciliation meeting was held at ORBIO RBI Bhubaneshwar. The meeting was chaired by the RBI ombudsman, Odisha, and attended by the deputy ombudsman, along with officers from ORBIO Bhubaneshwar. The ombudsman found that Ahmed was never physically present when the loan was sanctioned. He was in Qatar at the time of application, his signatures hadn’t been verified, and the lenders admitted to bypassing KYC norms — a grave regulatory breach.
After reviewing evidence and holding the conciliation hearing, the ombudsman also flagged insurance manipulation. A premium of R20,982 was deducted for credit protection, but the policy was later altered, issued in another name, and cancelled without informing the family. Calling this an operational lapse, RBI ordered that the loan be adjusted against the deducted insurance premium, and Rs 50,000 each be paid by ICICI Bank and SBFC Finance for mental distress within seven working days. The ombudsman also closed the loan account and directed that the original documents be returned to the family.
‘Inhuman behaviour’
Speaking with mid-day, Ahmed’s brother Ayaz Parkar described the lenders’ actions as “shameful and inhuman towards a grieving family”. He alleged that an additional R2,41,896 in EMIs was taken from the family through “mafia-like methods”, for which a fresh complaint has been filed.
In a heartfelt message, Ayaz said, “Do not borrow unless it is truly necessary. Debt is a heavy burden. Do not build your business with loans; rather, use what you have saved. Death comes suddenly, without regard for age or health. Protect your family by ensuring they are not weighed down with unnecessary debts. And if you do take a loan, share this with your family — never hide it. If your family advises against borrowing, listen to them; they only wish your well-being.”
The other side
An ICICI Bank spokesperson confirmed the development and said, “As a responsible financial institution, together with our co-lending partner and its insurance company, we have supported the family significantly by fully settling the loan and closing the loan account. This is in addition to having complied with the directives within the timelines indicated. We have also returned the original documents to the family a few months ago.”
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