Music maestro A.R. Rahman is to get Rs.50,000 as compensation from a government-owned bank for having been caused "mental agony".

A district consumer court has asked the overseas branch of the State Bank of India (SBI) here to compensate Rahman for "default of service" after it slapped a Rs.2.3 million additional interest charge on him against a loan he had already paid back.

Rahman had taken a loan of Rs.17.5 million ($385,000) from an SBI branch here in 1996 for his music company Panchathan Record Inn Private Limited to buy musical instruments.

The bank had initially told Rahman that interest would be charged at the rate of 2.5 percent over or below the SBI advanced rate (SBAR) subject to a maximum of 19 per cent.

The loan was to be repaid in 20 quarterly instalments from December 1996. The loan was given to Rahman after he mortgaged his property.

In 2001, when Rahman wanted to foreclose the loan and asked the bank to return the title deeds for his mortgaged property, the bank refused to do so.

The bank told Rahman that it had miscalculated interest "inadvertently" and he would have to pay 19.75 percent interest with retrospective effect. It amounted to an additional Rs.2.3 million besides what he had paid.

Rahman went to the consumer court, saying the "SBI had misled" him on the interest rate.

He told the court that if he had known he would have to pay interest at 19.75 percent he would have gone to another bank.

After three years of legal wrangle, the Chennai District Consumer Redressal Forum ordered the SBI to pay Rahman a compensation of Rs.50,000 for having caused him "mental agony".

The court also ordered the bank to return Rahman's property papers and close the arrangement as the loan has been repaid.