RevathiGanesh (Practicing Advocate) 14 December 2011

Signing in ecs mandate w/out permission

I took Car loan in the month of August from the SBI Bank. I have applied car loan for Rs.3,35,000/- in SBI bank with the EMI Amount Rs.5950 for the term of seven years. I have signed the loan agreement, loan sanction letter and ECS Mandate authorised by the HDFC Bank(Santhome branch) for the abovesaid amount of Rs.5950 in Seven years only. To my surprise the term of the loan is changed to five years consequently increasing the EMI from Rs.5950 to Rs.7495. I have enquired about this change of loan tenure with the Branch manager for which he is demanding me to sign a new ECS mandate mentioning Rs.5950 as EMI. NOW RS.7495 IS BEING DEBITED FROM MY HDFC BANK ACCOUNT TOWARDS THE SAID EMI. I HAVE NEVER SIGNED THE ECS FORM FOR THIS SUM, I WOULD LIKE TO KNOW IF SOMEONE ELSE FROM SBI SIGNED AS ME IN THE ECS FORM FOR THE CHANGED AMOUNT OR HDFC BANK IS WRONGLY DEBITING THE EMI. NOW I DOUBT THAT ONLY IF THE EMI IS CHANGED OR THE LOAN AMOUNT HAS ALSO INCREASED. How to proceed in this case?

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4 Replies

Rajesh Hazra (Mediator and Legal Counsel ) 14 December 2011

There was a change in regulations if rightly remembered during some time back. The Bank must have given a choice to either to keep the same deduction with the term getting longer or otherwise the amount of loan to be increased to accomodate the same term of loan.

However in your case you may settle this with the Bank authorities.

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sanjay kumar (BE/ LLM in Corporate Laws) 14 December 2011

Dear Madam,

I have gone through the ECS form of HDFC Limited available at www.hdfc.com/pdf/DCS%20mandate_web_2.pdf.

If you look at the other conditions given in the pdf file9(file attached), it says that "No fresh mandate is required for change in the EMI Repayment schedule.". So there is no fault on the part of HDFC Bank as such.The fault lies with the SBI that they have changed the loan tenure to 5 years from initially agreed 7 years. This you have to check up with SBI that the loan tenure has to be 7 years. Once the SBI correctsthe loan tenure to 7 years, there should not be any need for signing fresh ecs mandate.

Attached File : 70622 234153 8 dcs mandate web 2.pdf downloaded: 199 times

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RAJU O.F., (Advocate) 14 December 2011

Send a Notice to HDFC where you keep your account instructing them not to debit higher amount than what had signed in the ECS authorisation. Bank once agreeing for 7 years period cannot arbitrarily change into 5 years. You may file complaint before Banking Ombudsman against SBI making HDFC also a party.

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Kumar Doab (FIN) 15 December 2011

Learned experts and members have given valuable advice. Kindly follow it.

The loan is sanctioned by SBI and installment is being paid from your SB a/c maintained with HDFC Bank.

It is felt that HDFC bank can not allow debit of an amount over and above allowed by you, under your signatures by hand on ECS form provided by SBI, and sent by SBI to HDFC bank for verification and approval.

The ECS form is for, SCHEME NAME: EMI PAYMENT – HDFC LTD. It is believed that the clause "No fresh Mandate will be required whenever a change occurs in the EMI
repayment schedule (Refer point 6 of the mandate form)" is applicable in case the loan is sanctioned by HDFC bank Ltd.

You may however check the copy of ECS form provided by SBI and signed by you, loan rules quoted by SBI. If clarity is required you may demand info from Nodal Officer of the SBI or raise RTI. If shall be appropriate to do it before you raise a dispute.

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