Chennai, June 26, 2025:
In a significant ruling reinforcing accountability in the banking sector, the Madras High Court has upheld the dismissal of a State Bank of India (SBI) employee who was terminated due to a poor CIBIL (credit) score and adverse credit history. The Court observed that financial integrity is a core requirement for those handling public money, and banks are justified in expecting high personal credit standards from their staff.

Background: SBI’s Action on Credit Behaviour

The dismissed employee, who served as a clerical cadre staff member in SBI, was removed from service after an internal review flagged his low CIBIL rating and history of loan defaults. SBI had initiated disciplinary proceedings under its service regulations, asserting that a bank official with poor creditworthiness compromises the bank’s credibility and exposes it to reputational risk.

The employee challenged his dismissal, arguing that personal credit history should not impact employment, especially when no misconduct related to work was proved.

High Court’s Ruling: Personal Financial Discipline Matters

Justice D. Bharatha Chakravarthy, delivering the verdict, held that personal financial conduct is inseparable from professional responsibility in the banking sector. The Court rejected the employee’s plea, stating:

“A bank employee, particularly one who deals with public funds, is expected to maintain sound financial discipline. A poor CIBIL score reflects irresponsibility and could influence decision-making and credibility at the workplace.”

The Court emphasized that banks are entitled to lay down high ethical and financial standards, especially for employees in roles of financial trust. It further noted that SBI had acted within the framework of its internal policies and regulatory obligations.

Implications of the Judgment

This judgment sets a clear precedent for financial institutions, highlighting that personal credit behavior can impact professional roles in sensitive sectors like banking. It also underscores that disciplinary action can be justified even in the absence of direct workplace misconduct if the employee’s conduct reflects poor financial judgment or risk to the institution’s image.

Several public sector banks and financial regulators have already been tightening scrutiny on employee credit records, and this ruling is likely to influence future HR and compliance policies.

Case Title: K. Suresh Kumar v. State Bank of India & Ors.