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Nishant Chaudhary (CEO, Founder)     31 July 2015

Bank charged less interest rate for six years.

I got an education loan of 2.75Lakhs over duration of my engineering. My parents took care of the interest till 2008, that is when I started the repayment of the amount by depositing 5,000 per month. Upto last year I had repayed majority of the loan, only 40-50k was left and by April 2015 , it should have been repaid. When I got account statement for my loan in APril this month, I realized that last year bank added around 40,000 as recovery. 


After visiting both said branch and Loan HQ of the city, I got no answers. So I sent them a letter stating my displeasure over all this to the branch, CC'd to City HQ and Regional HQ. Today I received a letter stating that all these years, the interest charged was less than the actual interest (for six goddamn years) 

TL;DR: Been paying EMIs on educational loan of 2.75lk since 2008, should have been repayed by April this month but they debited 40,000 as bank charged less interest for six years.


My question is, is there any such decision by any court that protects coustomer when bank is at fault? I mean that had I had to pay 5,100 per month all this time then I would have not cared. It is banks fault that they failed to charge correct interest for six years. 

PS: I was never informed by the bank about this. I only found out about this 40k entry that was made to the account when I got the statement printed year after.



 4 Replies

T.V.MANIAN (SENIOR MANAGER(Retd) Nationalised Bank)     01 August 2015

dear Mr Chaudary,Try to get a statement of your loan account from the Branch, or if  u are having net banking and if provision is available, try to download the same. Get the rate of interest for the period of your loan from the website of the Bank.  If am correct, interst should be at simple  interest up to the period of of one year from the  course completion or  upto the date of your getting the employment ,whichever is earlier. Then it will be compounded.( that is interest will be added to the principal). So,You work out the correct amount of interest to be charged for the refrred period. If you found any excess amount of interest charged, you take it up with the Head office of that bank or with Customer care cell of that Bank marking  copy to Zonal Office/Regional Office/Branch of that Bank from where you have availed the loan.If you are not getting the rate of interest from the website or from the circulars of that Bank, try to get it thru' RTI.

1 Like

T.V.MANIAN (SENIOR MANAGER(Retd) Nationalised Bank)     01 August 2015

Dear Mr Chaudary,

The Branch and the bank may not be showing any interest in your issue, if you are telling them that this is the interest charged  and this should have been the interest charged. Then u will get response/refund, if  justified and found correct. If you are not getting any result then u can proceed with Banking Ombudsman with thet Bank and then with RBI and other grievance redress forum.

First you work out the details and ask for the refund if found any excess interest.

G.L.N. Prasad (Retired employee.)     01 August 2015

The essence is that first get the entire statement of account and specifically seek the following information.

a)Please provide the rate of interest charged effected for different periods.

b)Please provide a copy of extract of internal circular showing the procedure for charging interest on educational loans.

c)Please provide as to this mistake of interest application occured only in this account alone or for all the other educational loan accounts.

d)Please provide as to how the mistake was detected and when, and whether it was reported to higher authorities,and action taken against errant employees.

e)Please provide internal correspondence or reporting of the mistake to higher authorities etc., through certified copies as it amounts to leakage of income, and the borrower is put to loss, as he could not claim Income tax during the past period.

f)Please inform break up of the amount debited (showing periods, ROI, compound interest charged etc) unauthorisedly without intimating to the borrower.

Entrust the verification work to any auditor or chartered account and ask him to generate statement on the basis of interest specified and as per procedure shown in their directives.  If the Bank correct forget the issue, and if Bank is not proper enclose the copy of statement prepared and signed by Chartered accountant and demand for recredit of the excess amount, and if not complain to Banking Ombudsman or District Consumer Forum.

1 Like

T. Kalaiselvan, Advocate (Advocate)     08 August 2015

First gather relevant information and make a proper representation to the bank authorities venting out your grievances. Make sure you send your representation by registered post and get an acknowledgment for it and then if the reply is not satisfying, you may either approach banking ombudsman for remedy and relief or directly consumer forum for deficiency of service and can claim relief including compensation for mental agony. 

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