I had approached IDBI Bank, Mangalore branch twice. Once when i started looking out for property and then when i finalized the property. During both the meetings i asked the person to explain me all the charges that i might incur for applying the loan. But there was no mention of loan insurance.
On 4th Jan, once the property was finalized, I spoke to the branch Asst. Manager as well as the Manager and asked them about the processing charges and if there are any other/hidden charges that i would incur. But again no mention of any insurance. So I decided to go ahead with IDBI and gave the property and other documents for loan processing.
After, i guess, 5 to 10 days, when the valuation was done. I got call from asst. bank manager saying that the valuation was done and the loan amount i was looking for can be disbursed once the legal checks are successful. He also put a word that there will be a loan insurance which i might have to take. When i asked him to give details like premium etc, he said he does not have the information but it would be very nominal and said not to worry about it and that he would go ahead with the loan processing. I immediately asked him if this was how bank was trying to extract the processing fees.
On 16th or 17 Jan I got a call from the asst. Manager saying all the procedures related to my eligibility check are completed and he was entering the details into the system. At that moment he asked me details of loan tenure etc and at the end said the loan insurance premium is approx Rs. Rs.30,000. I told him it was very high for 16 lakhs loan and i do not want it as i already have a term insurance of Rs.30 lakhs. Then he suggested options of paying in 5 years and can be disbursed with the loan. etc. I called the customer care to check if this insurance was mandatory and why i was not told about it. The executive said it was not mandatory and it seems the executive or some one from head office called the asst. Manager asking why he was forcing insurance on customers. The asst. manager himself told me this on saturday 25th Jan.
Yesterday, saturday 25th Jan, i met the asst. Manager again. He said the insurance is compulsory without which loan cannot be disbursed. He said this is the norm nowadays and if i go to any bank, the insurance is mandatory. Just to confirm, I went to a no. of banks yesterday to check about this. They only said it is advisable to go for loan insurance but not compulsory. I called the asst manager as well as the manager to tell them about my findings. They gave a simple answer, if you need the loan you need to take the insurance else i can go to other banks.
I think this is cheating. By saying insurance is mandatory at the end of loan processing they force customer to give in.
Please let me know what can i do about this.