Foreclosure on cash credit limit
Vijay
(Querist) 15 April 2014
This query is : Resolved
dear sir,
we were enjoying cash credit limit with HDFC Bank Ltd. right from 2009. In march 2012, they added new clause that is "borrower is liable to be charged 2% of the total limits sanctioned in case the facilities are taken over by another bank DURING THE TENOR OF THE LOAN".
we received renewal intimation letter falling due on 17 feb 2014. we submitted all documents required on 13th Feb 2014. on telephonic discussions my relation manager told me that your sales is on negative side so we cant renew your limit on same limit amount. meanwhile we approached to the nationalised Corporation Bank. They offerd us the less rate of interest and enhancement.
on 31st march 2014 my limit was taken over by corporation bank. on that date we were not utilising the limit only the few payments of interest was debited from my credit balance. on 10th April 2014 my relation manager called me and asked for 2% foreclosure chareges.
please clerify the RBI rules
Raj Kumar Makkad
(Expert) 15 April 2014
If the limit was not renewed as on 17th Feb 2014, the banker has no right to deduct 2% foreclosure charges. Serve a legal notice and then move to the bankers ombudsman failing which file a consumer complaint.
Sankaranarayanan
(Expert) 15 April 2014
yes exactly you can send the legal notice ,
Rajendra K Goyal
(Expert) 16 April 2014
If the limit was not sanctioned, Bank can not charge foreclose charges. Writ to their head office, send legal notice, lodge complaint with Banking ombudsman or file civil suit.
ajay sethi
(Expert) 16 April 2014
agree with experts
K.K.Ganguly
(Expert) 16 April 2014
1. As per RBI Guidelones, no foreclosure charges are to be charged by the PSU Banks,
2. In your case the private Bank has not renewed the cash credit facility. So, where is the question of your foreclosing the said facility? It ids the Bank who has declined to renew the facility,
3. Bank is not right in charging any amount for your said foreclosure of the cash credit facility which has been triggered dues to the Bank's refusal to renew it,
4. Send a letter thorugh your lawyer.
Vijay
(Querist) 16 April 2014
dear sir
thanks for the replies.
on 31st march 2014 my limit was taken over by corporation bank & we authorize corporation bank to collect my original documents with hdfc bank. But till today they have not returned my documents. can they hold my documents for foreclosure charges. Today we have closed our account with hdfc bank
R.V.RAO
(Expert) 17 April 2014
the fact that hdfc bank accepted to close your cash credit account it self shows that their stand on fore closure charges is not correct.
there is RBI stipulation that noc is required for transfer of limits from one bank to another bank, and then your documents also to be returned.
in case these 2 things do not happen ,write to rbi/ombudsman cc to the refusing bank.
T. Kalaiselvan, Advocate
(Expert) 17 April 2014
A legal notice refusing to pay the foreclosure amount under the explained circumstances with a demand for return of documents etc., will provide a respite, if not the best next option is to approach the Banking Ombudsman for remedy and relief.
Vijay
(Querist) 23 April 2014
dear sir,
today my relation manager called me and said that i have received a reminder letter from corporation bank to submit the documents, but he said that "there is due amount of foreclosure charges in your account, so we will not return the documents till you pay the foreclosure charges".
i told him that i have not received any letter from your bank regarding the dues on account of foreclosure charges.
i told him that my limit was takenover by hdfc in 2009 and at that time there was no clause of foreclosure charges. in 2012 at the time of renewal you have added this clause. so this is the breach of original agreement with your bank. for 2014-15 i have not received any renewal letter from you side.
so please clearify what to be done next...
R.V.RAO
(Expert) 23 April 2014
why the bank is telecalling but not demanding in writing the foreclosure charges(FC) itself shows ,that the bank's action demanding FC is questionable.
demand the same in writing .if you get written demand, then write to ombudsman with proof .
hope you have not signed any renewal of limits letter from the bank. if so you are not bound to pay.time to act fast now. write to rbi ,dept. of banking affairs,cc to old bank and new bank also. you can also mark a copy to hdfc chairman.
K.K.Ganguly
(Expert) 24 April 2014
1. Send a legal notice protesting their coercive action of levying foreclosure charges & ask them to hand over the documents to you or the new Bank within 15 days failing which you shall take legal action against them,
2. If they do not comply with your notice, pay the foreclosure amount through a seperate letter with protest stating that you have been illegally coerced by the said Bank in to making the said payment & you reserve the right to take up the matter legally,
3. After you get the documents back, file a complaint case before the local District Consumer Dispute Redressal Forum alleging deficiency in service and unfair business practice claiming the said amount back, interest, damage & cost.
Vijay
(Querist) 19 June 2014
thanx for the suggesstions. the matter has been resolved. HDFC bank has submitted the original title deeds.
Raj Kumar Makkad
(Expert) 21 June 2014
It is very pleasure to know that your matter stands resolved.
