Mumbai Consumer Commission Orders ICICI Entities To Pay ₹77,777 Over Excess Home-Loan Insurance Premium

Mumbai, September 30, 2026: The District Consumer Disputes Redressal Commission, Mumbai Suburban, has held ICICI Bank Ltd, ICICI Home Finance Company Ltd and ICICI Prudential Life Insurance Company Ltd guilty of deficiency in service and unfair trade practice for charging a home-loan insurance premium on the sanctioned loan amount instead of the amount actually disbursed to borrowers.

In its order, the Commission directed ICICI Prudential Life Insurance Company to refund Rs 17,777 with 9% annual interest from April 26, 2011. It also directed all three entities to jointly pay Rs 50,000 as compensation to the complainants and Rs 10,000 towards litigation costs.

Insurance Premium Charged On Sanctioned Amount

The complaint was filed by Vaikunth Ramnath Nayak and Prashant Vaikunth Ramnath Nayak, who had obtained a home loan from the ICICI group in 2006. Although a loan of Rs 7,33,303 was sanctioned, only Rs 4,99,543 was actually disbursed. The insurance premium of Rs 32,021, however, was calculated on the entire sanctioned amount and deducted from the amount actually disbursed.

The insurance policy was subsequently issued on March 22, 2006, five days after the loan was disbursed on March 17, 2006. The Commission noted that by the time the insurance policy was issued, the actual amount disbursed was known, and the premium ought to have been calculated accordingly.

The complainants alleged that the incorrect premium calculation resulted in an erroneous repayment schedule and excess payments. They ultimately foreclosed the loan on March 29, 2011, and repeatedly approached the bank, home finance company and insurer seeking correction of the charges and a refund.

Commission Notes Transaction Chronology

The Commission observed that the chronology of the transactions was significant. While the loan had been sanctioned on March 7, 2006, it was disbursed on March 17, 2006, and the insurance policy was issued only on March 22, 2006.

The order states: “It is pertinent to note that the loan was sanctioned on 7th March, 2006 and disbursed on 17th March, 2006, the insurance policy was issued on 22nd March, 2006 i.e. much after, the disbursal of the loan amount. Therefore, the premium amount of Rs.32,021/- was calculated on the original sanctioned amount Rs.7,33,303/- and deducted from the actual disbursed loan amount Rs.4,99,543/-, leaving Rs.4,67,522/-. Therefore, the conduct of the ICICI Prudential to offer to refund Rs.8,741/- cannot be considered as a goodwill gesture and it proves the case of overcharging of the premium amount.”

The complainants also told the Commission that despite foreclosure of the loan and repeated grievances, the ICICI entities failed to resolve the issue and instead shifted responsibility among themselves. They alleged that they were also not provided duplicate copies of the insurance policy.

Complainants Allege Documentation Issues

They further alleged that the insurance-related documents had been signed in blank and subsequently filled in. According to the complainants, when the loan amount was reduced from Rs 7,33,303 to Rs 4,99,543, it was the responsibility of the bank and ICICI Home Finance Company to communicate the revised disbursal amount to ICICI Prudential so that the insurance premium could be adjusted accordingly.

The Commission found merit in the allegation of excess charging. It calculated the excess premium at Rs 10,774, while the interest charged on the excess amount was calculated at Rs 7,003, bringing the total amount payable to the complainants to Rs 17,777.

Compensation Awarded To Complainants

The panel also took note of the fact that ICICI Prudential had itself offered to refund Rs 8,741 during the dispute. The Commission held that this could not be treated merely as a “goodwill gesture”, observing that the offer supported the complainants’ allegation that excess premium had been charged.

The Commission rejected the complainants’ larger claim of Rs 4 lakh, finding it excessive and unsupported by sufficient evidence. However, it awarded Rs 50,000 as compensation for the deficiency in service and unfair trade practice and Rs 10,000 towards litigation expenses.

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The Commission also rejected the contention that the complaint was barred by limitation as it was filed in 2015 in relation to a loan transaction dating back to 2006. It noted that the complainants had continuously pursued the issue and that ICICI Prudential had offered a refund in 2013, while correspondence with the bank continued in 2014.

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