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Mobikwik Rocks (N/A)     21 August 2013

Simple interest on prepayment via home loan insurance policy

Hi,

I have a HDFC Ergo General Insurance policy on my home loan with HDFC Ltd. Recently I got a claim approved on the same for which HDFC Ergo made a payment directly to HDFC Ltd. The claim amount is supposed to be adjusted against my outstanding principle for Home Loan. However, they are charging me Simple Interest on the same. Is that legally correct?

AFAIK, simple interest on prepayment is charged only to recover money that I would have earned since the prepayment money was lying idle in my bank. In my case, the money was transferred from HDFC Ergo directly to HDFC Ltd. Am I be liable to pay simple interest on it?

Thanking in advance for your responses.



Learning

 4 Replies

Kumar Doab (FIN)     21 August 2013

This is with limited understanding on the matter posted by you.

------The RBI has ended prepayment/foreclosure charges.

{ RBI/ 2011-12/ 589

DBOD. No. Dir. BC. 107 / 13.03.00/ 2011-12      June 5, 2012}

You may go thru the T&C carefully and if such payment and interest on it is not described in T&C, you may write to the bank and demand reply in writing.

Based on the reply you may proceed further.

In case of issues you may approach a lawyer specializing in consumer cases.

 

------BCSBI has also issued guidelines;

The banks must inform you when they change interest rate on housing loan. (cf. para 3.3. of ‘Code of Bank’s Commitment to Customers.)

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)

Banks may allow early settlement of loan with penalty/ fess. Banks need to inform customers about these charges, upfront. Therefore, before availing the loan ascertain from your bankers fees levied as also penalty, if any for prepayment.

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

 

 

 


Attached File : 505983273 fcs050612fl.pdf, 505983273 housing loan bcsbi.doc downloaded: 141 times
1 Like

Mobikwik Rocks (N/A)     21 August 2013

Thanks for the quick response and the documents.

I didn't find any specific reference to insurance claim aspect in this; may be this document is quoted as a generic term.

But IMHO, logically, HDFC should not charge me simple interest since I never gained any interest for the claim settled by HDFC Ergo.

Hoping for further response.

Kumar Doab (FIN)     21 August 2013

You may write to the bank (under roper acknowledgment preferably by letter thru rdg. Post) and demand to supply the reply in writing and to substantiate their reply by enclosing supportive documents including but not limited to guidelines by RBI, BCSBI, IBA (mention if no such guidelines is issued by these bank should state so specifically in writing), agreement and clause number signed by you.

Based on the reply you may proceed further.

If the BM of the bank maintains studied silence you may escalate to its MD: Aditya Puri

aditya.puri@hdfcbank.com

 

You may go thru and relevant extracts from RBI’s:

'Fair Practices Code on Lenders' Liability' 

 

Ref.DBOD.No.Leg.BC. /09.07.007 / 2002-03       December 2002 

 

and

Code Compliance officer as per list and details published by BCSBI

And

Smt. Uma Subramaniam,

Chief General Manager -in-Charge

Department of Non-Banking Supervision

Central OfficeCentre I,

 World Trade Centre,

Cuffe Parade

Mumbai-400 005.

Phone: 022-22153350

Email id: cgmicdnbsco@rbi.org.in

THE DETAILED DUTIES OF DNBS CAN BE SEEN AT:

( DNBS:  Dept. of Non banking Services)

https://www.rbi.org.in/scripttts/AboutUsDisplay.aspx?pg=Depts.htm#DNBS

 

YOU MAY ALSO LODGE A COMPLAINT WITH:

. D Subbarao

Governor

Reserve Bank of India

Central Office Building18th Floor, Shahid Bhagat Singh Road

Mumbai-400 001.

022-22660868

 

As per various publication/grievances posted by consumers you may also not get an explicit and clear response and you may need to agitate.

In case of issues you may approach a lawyer specializing in consumer cases.

 

 

 


Attached File : 506019303 lender downloaded: 76 times
1 Like

Mobikwik Rocks (N/A)     21 August 2013

Thanks again for the prompt response in detail. I'll follow up on the same and keep this post updated on how it works out. :-)


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