Interest on Bank Deposits Not Per Se ‘Commercial’: SC

On March 19, 2026, the Supreme Court clarified that the mere accrual of interest on a bank deposit does not, by itself, render a transaction “commercial” so as to exclude a person from the definition of a “consumer” under Section 2(1)(d) of the Consumer Protection Act, 1986. Instead, the determining factor is whether the deposit is directly connected to or intended for generating profit.

The Court clarified that placing surplus funds in the bank does not amount to a ‘commercial purpose’ merely because interest is earned on them. However, where such deposits are used to facilitate business transactions or to avail credit facilities, they may be treated as serving a commercial purpose.

The case arose from a consumer dispute filed by Sant Rohidas Leather Industries and Charmakar Development Corporation Ltd., a government undertaking, against Vijaya Bank. The dispute concerned a fixed deposit of ₹9 crore made in 2014.

The company alleged that the bank had fraudulently permitted a third party to avail itself of an overdraft facility against its fixed deposit without authorization. It further contended that the bank adjusted the maturity proceeds of the deposit to settle the overdraft and returned only about ₹50 Lakhs.

The company then filed a complaint before the National Consumer Disputes Redressal Commission (NCDRC). The complaint was dismissed on the grounds that the transaction was for a commercial purpose and that the dispute involved complex questions of fraud, unsuitable for summary proceedings. Thereafter, the company filed a statutory appeal before the Supreme Court.

Examining the statutory framework, the Court noted that Section 2(1)(d) excludes from the definition of “consumer” those who avail services for a “commercial purpose,” while the explanation makes an exception for use related to livelihood through self-employment.

The Court held that earning interest on a deposit does not automatically imply a commercial intent, as deposits may also be made for safekeeping or statutory compliance. It reiterated that the determination depends on the dominant purpose of the transaction and the circumstances, rather than merely the nature of the entity or the existence of profit.

Along with it, the Court noted that the dispute involved serious allegations of fraud, forgery, and unauthorized pledge of the fixed deposit. It noted that such issues cannot be adjudicated in summary proceedings under the Consumer Protection Act, which is intended for cases involving “deficiency in service” under Section 2(1)(g).

Accordingly, while partly disagreeing with the NCDRC’s reasoning on “commercial purpose,” the Supreme Court upheld the dismissal of the complaint on the ground of non-maintainability. It clarified that the appellant remains free to pursue appropriate remedies before competent civil or criminal forums.