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UFirst off, I am so sorry for your loss and that you have to deal with this harassment while grieving. You have actually handled this perfectly so far by going to the RBI Ombudsman and sending that Speed Post AD.
To answer your specific questions:
**1. Arbitration and the legal notice:** This is a standard scare tactic. Banks use automated templates from their empanelled advocates to intimidate legal heirs into paying. The chances of SBI actually spending money to file a Section 11 petition in the High Court for an unsecured personal loan of a deceased person with zero attachable estate are basically zero. It is an empty threat. Once their legal department actually processes your reply and realizes there is no estate to attach, they will likely write it off.
**2. CPC Section 60 and statutory funds:** You are 100% correct. Statutory benefits like GPF, Gratuity, and Pension are completely immune from attachment. Furthermore, the law is very clear that legal heirs are only liable to repay a deceased person’s debt *to the extent of the estate inherited*. Since the inherited estate is zero, your mother’s personal liability is absolute zero. Even after the pension hits the savings account, courts have consistently ruled that banks cannot exercise a general ‘right of set-off’ or lien on survival/trust funds.
**What your next steps should be:**
Honestly, the most practical thing you can do right now is open a new savings account for your mother in a completely different bank (like HDFC or ICICI) and route her pension and any remaining terminal benefits there immediately.
Do not keep her survival funds in SBI. Even if you are legally right and have an Ombudsman order, their core banking system is automated and might keep attempting rogue auto-debits, which will just cause unnecessary stress for your mother.
Keep the Ombudsman order, the death certificate, and your Speed Post AD receipt in a safe folder. If recovery agents call, just state clearly that the borrower has passed away, there is zero inherited estate, refer them to your legal reply, and block the number. You are legally in the clear, so hold your ground. Good luck!
UThe money in your PPF is absolutely safe.Here is why your PPF got frozen even though you never shared its details. When a cyber complaint is filed the police do not just target a specific account number. They flag the PAN or the CIF (Customer Information File) linked to the disputed transaction. If your PPF is held with a bank that received the police notice their backend system likely placed a blanket freeze on your CIF. Sometimes the banks compliance team makes an error and freezes the wrong account under that CIF while leaving the main savings account active.
Since the complaint is from Jaipur your local bank branch cannot do anything to unfreeze it. You have to get the official police notice from your bank find the complaint number and liaise directly with the Investigating Officer at the Jaipur cyber cell to get a No Objection Certificate (NOC).
Do you know exactly which transaction triggered this or were you doing any crypto P2P trading recently?
