Bad credit, no bank job: SBI drops Ex HDFC manager, court backs move over adverse CIBIL score

The State Bank of India (SBI) recently rescinded a job offer made to a former deputy manager of HDFC Bank. The decision was based on the candidate’s adverse CIBIL score, resulting from defaulted loans taken to support a family business. The Madras High Court upheld SBI’s decision, underscoring the importance of financial discipline among bank employees who handle public funds. The case highlights the critical role of maintaining a good credit history for aspiring banking professionals. 

As per the court’s ruling, the petitioner, who had previously been employed with ICICI Bank and HDFC Bank, had taken several personal loans to support his younger brother’s business venture. However, the business faced significant setbacks after his brother suffered an accident, resulting in loan defaults and a mounting debt burden.  The Economic Times reported that his credit profile showed a history of defaults, overdue payments, write-offs, and over 50 credit enquiries between 2016 and 2021.

Although he successfully cleared the SBI CBO examination and interview and was issued an appointment letter in March 2021, the candidate’s job offer was subsequently revoked after an adverse CIBIL report emerged. This incident serves as a cautionary tale for those in the banking sector, emphasizing the need for financial prudence. 

The candidate had successfully passed the examination and interview for the Circle Based Officer (CBO) position at SBI, but his appointment was later cancelled due to his low CIBIL score. Following the rescindment, the former HDFC manager filed a writ petition in the Madras High Court, citing a letter from SBI’s HR stating that loan defaults could be rectified before joining. However, the court dismissed the petition, affirming SBI’s right to make hiring decisions based on credit reports. This decision reinforces the importance of creditworthiness in the hiring process.

In its judgment, the court stated, “…The bank took a prudent decision that the candidates with a history of default in repayment of loans and adverse CIBIL…were ineligible. The probable rationale behind the said criteria may be that in banking business, the employees deal with public money and therefore financial discipline needs to be strictly maintained.” 

The ruling has implications for both private and public sector banking job seekers. According to Abhinav Sharma, Partner at Dentons Link Legal, “Aspirants seeking employment in the banking sector should carefully review the details in recruitment notices and maintain a good credit record, as a low CIBIL score may affect their job prospects.” This case serves as a reminder that creditworthiness is a crucial factor in the banking sector’s hiring process. Job seekers must be vigilant about their financial history to avoid similar setbacks.

The decision also aligns with SBI’s internal rules, specifically Clause 1(E), which allows the bank to reject candidates with adverse credit histories. As per the Madras High Court, “I find no merits in the writ petition and hence, the same is liable to be dismissed. Accordingly, the writ petition is dismissed. No costs. Consequently, the connected Miscellaneous Petition is closed.”