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Informist, Thursday, Mar. 19, 2026

 

NEW DELHI – The Supreme Court Thursday held that earning interest on a bank deposit cannot be called a "commercial purpose" transaction for the depositor to be excluded from the definition of "consumer" under The Consumer Protection Act, 2019. However, if the deposit is made to leverage credit facilities to augment business, it would have a direct nexus with revenue generation and so the person making such deposit will not be considered a "consumer", it said.

 

In the normal course, parking of surplus funds by a body corporate with a bank, either for safe custody or to comply with statutory requirements, is not reflective of a commercial purpose, the court said, more so because ordinarily all deposits in a bank earn interest. It would therefore be naive to say that just because a deposit earns interest, banking service is being availed for a commercial purpose, it said.

 

"However, it would be different where deposits are made to leverage a credit facility, or for availing other banking services for business use," said the bench of Justice P.S. Narasimha and Justice Manoj Misra. "Deposit of the latter kind may amount to availing banking services for a commercial purpose."

 

The court rejected a complaint filed by Sant Rohidas Leather Industries and Charmakar Development Corp. Ltd. against Vijaya Bank, now merged with Bank of Baroda. The petitioner had claimed INR 90 million, along with interest, from the bank for foul play in sanctioning a loan to another party against the company's fixed deposit.

 

The court disagreed with the view of the National Consumer Disputes Redressal Commission, New Delhi, that earning interest on a deposit automatically amounts to a commercial activity. It, however, upheld the commission's rejection of the complaint saying complex allegations of fraud were involved and these cannot be adjudicated upon in proceedings under the Consumer Protection Act. The allegations can only be addressed in criminal or civil proceedings, it said.

 

The case has its genesis from the petitioner investing INR 90 million by way of a fixed deposit with the bank for a period of one year in 2014. The petitioner later received a letter from the bank about the sanction of a loan of INR 81 million against the fixed deposit. After a complaint, the bank informed the petitioner that the overdraft facility had been closed by adjusting the amount outstanding thereunder against the maturity value of the fixed deposit and the remainder amount of INR 50.59 million would be remitted. The petitioner accepted neither the adjustment nor the remission and requested the bank to pay the entire amount mentioned in the fixed deposit receipt.

 

Thursday, shares of Bank of Baroda ended 3.7% lower at INR 272.60 on the National Stock Exchange.  End

 

Reported by Surya Tripathi

Edited by Rajeev Pai

 

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