Madras High Court Backs SBI’s Decision to Deny Job Over Poor Credit Score

In a recent ruling that has sparked widespread discussion, the Madras High Court upheld the State Bank of India’s (SBI) decision to cancel the appointment of a candidate for a Circle-Based Officer (CBO) position due to a poor credit history. The court’s verdict touched upon the importance of financial discipline for bank employees who handle public money, reinforcing the bank’s strict eligibility criteria. This case highlights the growing role of credit scores, like those from the Credit Information Bureau (India) Limited (CIBIL), in employment decisions within the financial sector.

The case began when a candidate, whose identity has not been disclosed, applied for the role of Circle-Based Officer at SBI. The candidate cleared every stage of the selection process. On March 16, 2021, SBI issued an appointment letter, signaling a successful end to the rigorous hiring process. However, just weeks later, on April 9, 2021, the bank revoked the appointment after reviewing the candidate’s CIBIL report, which revealed a history of irregular loan repayments and credit card defaults.

The candidate challenged the cancellation in the Madras High Court, arguing that they had cleared all outstanding dues by the time of the application and had no pending loans. They claimed the bank’s decision was unfair, especially since they had met all other eligibility criteria. However, the court found no merit in these claims.

Financial Discipline: A Must for Bank Employees

Justice N. Mala, who presided over the case, strongly supported SBI’s stance, stating that financial discipline is non-negotiable for those entrusted with public funds. In her ruling, she stated, “One more aspect that needs mention here is that the bank took a prudent decision that the candidates with a history of default in repayment of loans and adverse CIBIL and other external agencies reports were ineligible. The probable rationale behind the said criteria may be that in the banking business, the employees deal with public money and therefore financial discipline needs to be strictly maintained.”

The court further reinforced this view, adding, “Further, there must be efficiency in handling public money and obviously a person with poor or no financial discipline cannot be trusted with public money.” 

This underscores the court’s belief that a clean financial track record is essential for roles in the banking sector, where employees manage sensitive financial transactions daily. SBI’s eligibility criteria, specifically Clause 1(E) of the recruitment notification, clearly state that candidates with a history of defaulting on loans or adverse CIBIL reports are ineligible for appointment.

Why Credit Scores Matter in Banking Jobs

The use of CIBIL scores in employment decisions is not new but has gained traction in India’s financial sector. A CIBIL score, a three-digit number ranging from 300 to 900, reflects an individual’s creditworthiness based on their borrowing and repayment history. A score above 750 is generally considered strong, while lower scores can signal financial irresponsibility. Banks like SBI argue that employees with poor credit histories pose a risk, as their financial struggles could influence their decision-making or lead to unethical behavior when handling public funds.