Wrong charges by bank.
ARUN JOGALEKAR
(Querist) 09 July 2013
This query is : Resolved
Sir,
One of our customers, has shifted to another bank, since the existing bankers delayed renwal of limit for more than 3 months.
The existing bank, once informed of shifting of the bank , sent a email,to the client informing that they have renewed the limit, to which the client sent back a email stating that the terms of renewal are not acceptable to him, and he will like to not go ahead with the renewal.
Now this bank has charged the client 2% as preclosure penalty, and also processing fees for the same. Can the bank unilaterally renew working capital limits,without the client approval and debit this amount to the client.
What are the options available to the client to recover this charges wrongly debited to his account.
Please advise.
Guest
(Expert) 09 July 2013
Not the information about shifting to another bank but cancellation of request for renewal of limit was material in this case.
Before communication of renewal of limit by the bank, did your customer inform the bank about cancellation of his request for renewal of limit due to such long delay?
Rajendra K Goyal
(Expert) 09 July 2013
Since renewal of limit was requested and the request was not withdrawn, bank is justified in charging processing charges for sanction / renewal of limit.
Find out whether pre-closer charges can be levied or not, from bank site where service charges details are available as per RBI guidelines.
ARUN JOGALEKAR
(Querist) 10 July 2013
Dear Sir,
The company had sent a email to the bank officer as per below :
"Reference several emails and talks, we still have not received any information on our request for revision of our limits as per our mail below.We have been asking your bank to renew and enhance our limits for the last three months
In lieu of above I would like to discontinue our account with your bank.
Kindly issue us account closure letter informing us the formalities to be completed to close your account."
In reply to this email, the bank had sent a email, stating that :
"With reference to the last meeting at your office on 11.06.2013 regarding the renewal cum enhancement of limit, we give you the following :"The existing limits have been renewed and enhanced " with the terms.
The company has immediately replied to this email, that :
The below terms are not acceptable,to us, and we will not like to renew the limits.
with your bank. This is for your information.
We will be closing the account,by clearing the outstanding dues shortly.
We thank you for your support ,and we had a very good relationship,with your esteemed bank,
and appreciate the same.
Please advise, if the bank has any right to set unilateral terms for renewal, without taking the clients signature on the renewal sanction letter .
Guest
(Expert) 10 July 2013
The wording of email message may not help your customer.
In fact the message, of the company "I WOULD LIKE to discontinue our account with your bank," merely denotes an intention to close the account, not the clear mandate to actually close that.
Moreover, request for enhancement of limit was also not cancelled even in moderate words.
In law, it is a game of words and their interpretations. Only benefit of doubt can be taken, provided the judge is convinced about the intentions. However, the other party (Bank) can defend its stand that his complaint was redressed by enhancement of limit before he actually could give any mandate to the bank to necessarily close the account.
So, language matters much.
Rajendra K Goyal
(Expert) 10 July 2013
Agree with expert PS Dhingra ji, well advised. Nothing more to add.
ARUN JOGALEKAR
(Querist) 15 July 2013
Dear Sir,
I once again give all the facts of the case.
Please also advise,which is the correct forum to protest against overcharge by the bank.Is it the : Banking ombudsman, the Consumer forum, or the Courts.
Facts of the case is:
Working capital Limits were due for renewal on the 12th,March, 2013.
All necessary documents, for renewal were submitted to bank, as and when requested.
The bank despite verbal and email reminders, had not renewed the limits .
On 21st,of June,2013.Client frustrated, with non-renewal and non-enhancement of the bank limits, decided to switch to another bank, and sent a email to the bank, advising them to close the account .
The bank in reply, sent a email, stating limits are due and enhanced, to which the client responded,by saying that the terms of renewal are not acceptable to the customer.and he will not like to renew the limit.
The client cleared all the outstanding of the bank, in the next few days.
The bank deemed this as a pre-closure and charged to the client on the 9th of July,
Prepayment fees and Renewal processing fess all on the same day.
The bank officers when asked to clarify, informed that the client continued to use the limits, from 12th,March onwards, thought it was not renewed, and it was as good as deemed renewal, and the bank has hence applied the renewal processing fees charges, and prepayment penalty ,on pro-rate basis since limits were used for 3 months,even after expiry of the limits.
The client contention is :
1.The limits, were not renewed due the delay from the bank side, and hence,the client had in expectation and assurance of the bank, continued to use the limits, at the mercy of the bank, since the limits, could have been withdrawn at any stage, as it was an on demand terms..
2.The bank has charged the client renewal processing charges and prepayment charges on the same day i.e the 9th,of July,2013, on a same day simultaneously, which shows that the bank has charged the customer wrongly ,as how can the limit be renewed and closed on the same day.
3.No letter of renewal, with terms and conditions, was issued to the client, nor was the clients signature taken on any renewal letter till date.
Please guide and advise your thoughts on the same.
Rajendra K Goyal
(Expert) 15 July 2013
The client never asked not to renew his limit. If limit not required to be renewed, the account should be closed. Yearly limit renewal processing will be levid till account is closed.
The client has never asked to close the account and pay the outstanding. Limit need to be renewed yearly, if it was used, the renewal processing charges are payable.
If the limit is being used upto the previous level, it is deemed to be renewed for the year.
If the client is not satisfied he may approach Banking ombudsman, consumer forum, Parmanant lok adalat (Public utility services) or civil courts.
