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Nikita Jain (None)     09 January 2013

Plz Help. What should i do now ???

I had taken a mortgage loan @ 9% interest. The installments (EMIs) started from June 2006. The loan was for a period of 7 years hence it was to end in June 2013. The EMIs were worked out at 7500 per month. Today (after 6 years), the bank manager called me up & told me that the interest rates had been floating throughout this period & hence my outstanding balance was Rs. 2,00,000. I was shocked. As per my calculation, I just had to pay Rs. 37,500 (i.e. 7500 x 5 months) but now they are asking for Rs. 2,00,000.

What should I do now? Can I take any against the bank ???

Plz reply fast...



Learning

 12 Replies

Ratnesh kumar (Advocate)     09 January 2013

well, as far as i think u should first check out the agreement and the papers which you signed with bank at the time when u were taking the loan and if there is mentioned about floating intrests rate than u can do anything if that is not wriiten in that agreement than they cant take a single penny more than required

ratnesh kumar

advocate

9334185956,09835450455

1 Like

Kumar Doab (FIN)     09 January 2013

Bank's are under obligation of "Code of ‘Bank’s Commitment to Customers’.

Find out the lapses at the end of BM and Bank and agitate.

FAQ BY BCSBI:

6. What is ‘Floating’ or ‘Variable’ Rate Loan?

·         Interest rate is not fixed and can be varied by the bank. The rate is linked to a reference rate (generally, prime lending rate) declared by the bank from time to time.

·         If the PLR goes up, interest rate on housing loan and monthly repayment will go up and vice versa.

·         The bank fixes a spread between PLR and floating rate while sanctioning a loan. The spread remains constant during the tenure of the loan. The spread can be changed with mutual consent of borrower and the bank.

The loan document specifies the reset period for changing interest rate, i.e. at the beginning of the following month/ quarter/ half-year

7. How and when banks should communicate changes to terms and conditions?

·         · In terms of para 3.5 of ‘Code of ‘Bank’s Commitment to Customers’, banks have to inform customers changes in terms and conditions one month in advance. Changes to the terms and conditions may be communicated through any of the following channels:

o        Account statements

o        ATMs

o        Notice Board at each branch

o        Internet, including email and website

o        Newspaper

If your bank makes any change without notice, it will notify the change within 30 days. If such change is to your disadvantage, within 60 days you are free to close the account or switch it without having to pay any extra charges

8. What is EMI?

Repayment of a loan is usually made on a monthly basis in equated monthly instalments (EMI). Each instalment consists of two parts, namely, principal repayment and interest payment. EMI is mutually agreed between the borrower and lender. The instalment depends on the following:

·         principal amount of loan

·         loan tenure

·         interest rate

 

11. Do I have access to loan documents? If so, what are they?

Yes. You can have access to loan documents. Following are some important documents provided by banks:

·         letter of offer

·         copy of filled in loan application

·         copy of loan agreement

·         terms and conditions governing the housing loan

other documents such as schedule of fees and charges

Banks are required to give authenticated copies of documents executed by you free of charge. (cf. para 8.11.1 of Code of bank’s Commitment to Customers)

 

2 Like

Nikita Jain (None)     14 January 2013

Thanks Ratnesh Sir & Kumar Daob Sir.

As suggested by both of you, now I've given a written application demanding copies of the loan agreement & all other relevant documents regarding the loan. The Manager says it will take 2-3 days.

The thing that bothers me most is that the rate of interest had increased from 10% to 15% within a period of 1 year from the date of commencement of loan, but the bank did not intimate me about this change nor did they revise the EMIs. They have been accepting the EMIs for 6 years & now when the loan is going to end, they are asking for Rs.1,50,000 extra. 

My question is that if the bank does not agree to waive off the excess amount of loan, then what should be my course of action? I mean whom should i approach & what should be my arguement ??? Plz reply fast...

pervez (adviser)     14 January 2013

Dear, See yr documents which you had executed i.f.o bank. If u had agreed for floating rate of interest, you will have to pay.. The provisions contained in the agreement shall prevail now..... While making payments, had u checked up with baks regarding outstanding payment.... ? Has bank issued demand advice to you...?

In case of any unfairness in the transaction, u can report to RBI and also to Banking ombudsman....

Regards  

1 Like

Kumar Doab (FIN)     14 January 2013

 

It shall be difficult to believe that BM and Bank shall accept their lapse if any and grant you relief on their own.

It is easy to believe that BM and bank shall cite lapses on your part and safeguard their interest.

It is absolute stupidity and nuisance that even in case of loans which is an individual contract between customer and bank the bank shall issue advertisement in paper and shall not issue and supply individual and personalized communication to customer by effective means of communication e.g. redg/speed post although banks have centralized the loans in loan cells and can negotiate with couriers of repute and even use OIGC. It has been seen that at times couriers charge less than or equal to charges on normal/ordinary post for bulk couriers e.g. telecom companies send bills thru couriers enrolled as agancies.

You have to find fault with bank.

https://www.drtsolutions.com/RBIGuidelines.htm

 

'Fair Practices Code on Lenders' Liability' 

2. Guidelines on Fair Practices Code 

(ii)              Banks and Financial Institutions should devise a system of giving acknowledgement for receipt of all loan applications.

(ix)            Lenders should keep the borrowers apprised of the state of their accounts from time to time and shall give notice of any change in the terms and conditions including interest rates, service charges etc

In your case apparently BM and Bank has not provided you the copies on the post and as per your latest post you are applying now.

You may obtain acknowledgment with date and seal from BM and keep it safely.

It may help you to agitate that you were not made aware that you have to approach the bank for revised EMI etc……..

 

You may visit the BM with your near and dear one to act as your witness {preferably such transactions should be video recorded. Mobile is handy and useful.} and ask to show you the loan file { at a place/seat which is covered by CCTV} and check if BM/bank has recorded in file that some letters have been sent, and also seen dispatch register.

BM/Bank may claim that generic letters/circulars by ordinary mails were sent.

Have you provided email to bank in loan application or has the bank been sending emails to you?

You may raise your queries/grievances/protest to the BM and bank in writing under acknowledgment.

You may also approach a competent and experienced lawyer specializing in such matters/consumer cases and proceed under expert advice. Your representations to the BM/bank should be carefully structured to suit you in the long run and build some favorable record.

It shall be worth of approaching some experienced banker amongst your acquaintances and show all of your record and tips by him may help to find loop holes with BM/Bank.

Your lawyer may suggest to first trying with internal grievance redressal mechanism of the bank or may suggest agitating in DCDRF. BO may not be of much help and lot of time may be wasted.

Valuable advice of learned expert/members is sought.

https://www.bcsbi.org.in/FAQs_KnowBCSBI.html   and   https://www.iba.org.in/bcsbi.asp

and  https://www.bcsbi.org.in/Speeches_KJ_Udeshi.html

and

https://www.bcsbi.org.in/Code_of_Banks.html

 

 6. What is the Code of Bank's Commitment to Customers about?

  • Loans and advances and guarantees

You may also look into:

Model Policy For Grivance Redressal In Banks


Attached File : 412092087 lender, 412092087 iba model policy for grivance redressal in banks.pdf downloaded: 130 times
1 Like

Nikita Jain (None)     18 January 2013

Thanks Kumar Daob Sir & Pervez Sir. As u had advised, I have now got a copy of the loan agreement & here's what it has to say about the interest portion:

"The Borrower shall pay interest @ 4% over the Reserve Bank rate subject to a minimum of 10% per annum with monthly rests provided. However, that the above rate of interest may be revised or increased by the bank either in its sole discretion of which notice shall be given to the borrower or in accordance with the directives of RBI issued from time to time & the borrower hereby agrees to such revision and increase in the rate of interest and this agreement shall be contrued as if such revised or increased in the rate of interest were mentioned herein and agreed to be paid by the borrower and are hereby secured."

This is the exact language written in the loan agrement. I have not been given any intimation by the bank of changes in the rates of interest. I have already deposited 80 EMIs out of the 84 EMIs that were prescribed by the bank.

Kindly advise as to what should be done now ???

Kumar Doab (FIN)     18 January 2013

 

You have posted that:

 

--“I had taken a mortgage loan @ 9% interest.”

And now

The Borrower shall pay interest @ 4% over the Reserve Bank rate subject to a minimum of 10% per annum

 

Both are contradictory.

 

--“ now I've given a written application demanding copies of the loan agreement & all other relevant documents regarding the loan.”

 

Bank is under obligation to supply you:

letter of offer

·         copy of filled in loan application

·         copy of loan agreement

·         terms and conditions governing the housing loan

Loan sanction letter

other documents such as schedule of fees and charges

You may look into your application; docs supplied by BM and demand other docs in writing under acknowledgment, and rate of interest offered to you, sanctioned to you.

 

--“However, that the above rate of interest may be revised or increased by the bank either in its sole discretion of which notice shall be given to the borrower”

Has the bank issued any notice to you since in loan agreement bank has stated the ROI minimum of 10% and sanctioned loan mortgage loan @ 9% interest.

It is felt that BM has asked for amount of Rs. 2,00,000.

by phone as probably no notice was sent and at the time of closure of loan the borrower can be coerced and forced as a clear NOC and CIBIL report would be need of customer.

 

BM and Bank may seek refuge citing notice and information is given thru:

 o        Account statements

o        ATMs

o        Notice Board at each branch

o        Internet, including email and website

o        Newspaper

--“ bank did not intimate me about this change nor did they revise the EMIs.”

BM/bank may claim that you were asked in bank to submit repayment as per revised ROI.

If the bank had collected PDC then did the bank ever write to you for submitting new cheques or pay the difference?

You have to check all the docs with you and also loan file maintained by bank, dispatch register { try to keep elders/witnesses with you and try to record}…..call the bluff of the BM and bank and you have to find loopholes, lapses, deficiency.

You may show all docs and record to your lawyer and proceed under expert advice of your lawyer.

Valuable advice of learned experts/members is sought.

 

1 Like

Nikita Jain (None)     21 January 2013

Thank U Kumar Doab Sir for your detailed explanation. And ya i made a mistake. The loan was taken by me @ 10% interest & not 9% interest. So that was an error on my part. Now after taking all the legal opinions, I've decided to take the following course of action. This is what I'm planning to do:

1. I'll demand the copies of all other documents relating to the loan taken by me.

2. I'll approach the Nodal Officer of the bank in my city. I'll focus my arguement on the following lines :

"the above rate of interest may be revised or increased by the bank either in its sole discretion of which notice shall be given to the borrower"

3. If there is still no settlement, then I'll approach the Banking Ombudsman.

Is this the right way to go, Sir ???

Kumar Doab (FIN)     21 January 2013

You may obtain all docs and show all docs and record to your lawyer, and give inputs in person.

Let your lawyer evaluate the merits. Thereafter you may proceed under expert advice of your lawyer.

Online discussion have its own limitations.

It is felt that DCDRF may be a better option than BO. However you may proceed as deemed fit at your end.

Valuable advice of learned experts/members is sought.

 

Nikita Jain (None)     02 October 2013

Now I've been asked by the bank to pay Rs.130,000 as final payment after I've paid off all the instalments. Is it justified ???

What should be my next step now ???

Please help. Your advice is highly appreciated....

binay (advocate)     04 October 2013

ask the branch manager to supply u the detailed account statement, & how the EMIs deducted from the account. then consult an advocate

RAJU O.F., (Advocate)     05 October 2013

Floating rates are fixed by banks for an account, considering the borrowers rating, and the interest is fixed based on bank's BPLR plus or minus one figure. You obtain the particulars of BPLR of that bank from the date of your loan till date and find out the effective interest rate. Then find out the actual dues at diminishing balances (deducting your remittances every month) with such interest rates. If there is a difference of amount, take up with bank for reversal of excesses and if necessary approach Banking Ombudsman or RBI for remedy.


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