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ICICI Bank levies ‘foreclosure’ charges on loan, to compensate;
Express News Service
Posted: Apr 25, 2009 at 2237 hrs IST
Chandigarh The District Consumer Disputes Redressal Forum has directed the ICICI Bank to pay Rs 50,000 as penalty for causing harassment to a loan applicant by levying foreclosure charges on the homeloan he had applied for.
The bank has also been directed to refund Rs 2,71,289.45, which they charged as foreclosure charges in addition to Rs 5,000 towards costs of litigation.
The complainant, Sanjay Kumar Garg, was disbursed a home loan of Rs 1.30 crore, which was to be paid back in 120 monthly installments of Rs 1,74,813 each, with a floating rate of interest at 9 per cent per annum.
The complainant averred that he paid 33 installments up to July 31, 2008 and then wrote a letter to the bank seeking details of the exact balance left to be paid.
He was asked to deposit Rs 1,24,62,655.28, including Rs1,20,93,55 as principal outstanding amount, Rs 97,000 as interest up to July, 2008, and Rs 2,72,104.88 as foreclosure charges at the rate of 2.25 per cent.
He requested to waive off the foreclosure charges, but to no avail. The loan account was finally closed when the complainant paid Rs 1.25 crore.
In its reply, ICICI Bank said the foreclosure and pre-payment charges were accounted for according to the terms and conditions of the loan
Ruling that “foreclosure” and “pre-payment” are not interchangeable words, the forum said the counsel for ICICI could not produce any agreement under which the complainant was liable to pay the said charges.
“There is no agreement for paying any fee or charges in case of foreclosure. The bank asked for foreclosure charges, which is beyond the terms of the agreement,” held the forum.