The Kerala High Court delivered a significant ruling on June 2, 2026, directing a co-operative bank to return ₹5 lakh along with 12% interest and ₹10,000 towards cost and compensation to a depositor. According to reports from Mint, the case involved Sethumadhavan of Mullamkunnath Kavu in Thrissur, whose ₹5 lakh fixed deposit matured on June 2, 2015, but remained unpaid for years. The court allowed the bank six months to comply with the order, rejecting the bank's plea that attributed the delay to being under an administrator between December 2014 and May 2022.
As reported by Mint, the depositor initially approached the District Consumer Disputes Redressal Commission in Thrissur in December 2021, which directed the bank to repay the ₹5 lakh with 12% interest and ₹10,000 as cost and compensation. The bank did not comply and challenged the order before the high court after a delay of 825 days. The bank argued that because it was a co-operative bank, provisions of the Kerala Co-operative Societies Act applied and the consumer forum did not have jurisdiction. However, the larger Bench rejected this argument and upheld the consumer commission's order.
According to the Mint report, the Kerala High Court observed that a banking institution dealing with public money is duty-bound to make prompt payment of funds to its depositors. The court criticised the bank for relying on technicalities when its liability to return the matured FD was not disputed. Importantly, the court stated that the Consumer Protection Act provides an additional remedy for consumers and that provisions under the Kerala Co-operative Societies Act do not take away a depositor's right to approach consumer forums.
As reported by Mint, depositors facing delayed FD payments should first approach the bank in writing with a written request for release of matured FD proceeds. The report recommends keeping all documents including FD receipt, bank statements, maturity advice, and correspondence with the branch. If the bank does not resolve the complaint, depositors can escalate through the bank's internal grievance-redressal mechanism or approach the RBI's Integrated Ombudsman Scheme for eligible complaints against RBI-regulated entities.
According to Mint, RBI rules provide that when a term deposit matures and the proceeds remain unpaid, the amount generally earns interest at the applicable savings-account rate or the contracted rate on the matured term deposit, whichever is lower. Banks are required to include instructions regarding payment of deposits on maturity in the term-deposit application form and provide advance intimation of maturity dates as part of customer service. The court's ruling is significant as it affirmed that the Consumer Protection Act can provide an additional avenue for depositors, even where co-operative society law provides its own dispute-resolution mechanism.
