'Banks should not deduct more than 50% from the pension of a retired employee', know why the High Court gave this decision:

The Karnataka High Court has directed Canara Bank not to deduct more than 50 per cent of the pension of a retired bank employee to recover outstanding loans. The court said that pension serves as a financial security for retirees and should not be used entirely to repay loans except in cases of fraud, forgery or malpractice.

Justice SG Pandit, while delivering the verdict, said that the banks have the legal right to recover the dues, but they must follow the rules that protect the livelihood of the pensioners. He said that the financial stability of the pensioner is essential and forcing them to give up their entire pension to repay the loan would violate Article 21 of the Indian Constitution.

What is the whole matter?

The case was brought before the court by Murugan O K, 70, a retired Canara Bank employee who currently lives in Thrissur, Kerala. Murugan retired on November 30, 2014 and has been consistently paying his loan EMIs from a portion of his pension. However, from July 2024, Canara Bank started deducting his entire pension to pay off the dues, leading him to seek legal intervention. He also requested the court to restrain the bank from charging penal interest on the educational loan for which he was a co-borrower along with his daughter.

Canara Bank argued that Murugan owed Rs 8.5 lakh. The bank said it had the right to recover the outstanding amount. However, the court ruled that the bank can deduct only 50 per cent of his pension for loan recovery.