You are right is to reduce the amount and monthly rest balance after payment of your EMI your principal amount should be reduced so that your interest should be charged properly in case your bank is not providing you deduction in your principal then you have to write the bank and incase Bank do not short out your issues you have to write to the banking ombudsman and the ombudsman man will start of the matter within 30 days if you do not receive reply from banking ombudsman within the stipulated time you can file your complaint with the consumer forum against the bank and ombudsman

Seek explanation from home loan company after that go before banking ombudsman or  consumer court for deficiency of service

approach before concern bank branch manager. If your bank does not address your complaint within a month, you can approach the banking ombudsman. 

You cannot stop paying EMI 

2) when you take a loan bank furnishes detailed statement as to how much interest , principal would go for repayment of loan 

3) in first few years more money goes towards interest than principal repayment 

4) even if you transfer loan other bank would be doing the same 

You consult with some finance expert first. Bank generally adjust interest portion first. Loan portion later. You need to pay the same no. of EMIs. No extra financial burden to you. 

At this stage no legal action is required. 

Don`t default in EMI and complain to RBI under The Banking Ombudsman Scheme.

Home loan EMI would be for years, so default in EMI in not purposeful. All your EMI`s will recover, you just need to carry evidence of deposit. Ask the bank to provide you loan disbursement statement. 

If no EMI`s shown, file police complaint agasint bank and unknown employee for embezzlement of amount deposited by you. 

Further relief from civil or consumer court. Prior to that send legal notice to initiate legal proceeding agasint bank if failed to reconcile account in 7 days.

Generally the EMI repayment in the initial stage may not cover loan repayment, especially if it is a very long term loan, for some initial period the repayments will be towrds the interest portion alone and gradually the payment will cover interest and principle as well.

You may visit the EMI details given to you in the form of brochure at the time of availing the loan or you can inquire from any knowledgeable person that how the repayment works and what are the chances to confirm your allegations.

If the bank manager is not responding to your query you may write to the higher officer of the bank seeking clarification instead of depending the reluctant manager alone.

In my opinion the bank cannot dare to cheat the customers in this manner as you allege however there is nothing wrong in your confirming this issue to satisfy your quest, in case of any such wilful fraud the system will not accept the same, hence you better clarify the details before you plan to initiate legal steps on this.

1. As per the information mentioned in the present query, makes it clear that the bank has done fraud in you and now delaying the process at their end.
2. If they wanted to deduct the interest rate for the first year then they should have mentioned the same in the agreement to loan and informed you also.
3. Interest rate goes on the calculations of deductions as per the RBI schedules, but surely not like this.
4. You should file a suit for compensation for metal harassment and adjusting the amount so paid in principle amount before the civil court of law.

Hi

EMI is Equated monthly Installement which means the major portion of your Installement go towards interest in starting of loan and in subsequent Installements Interest portion goes down and principal deductions increases. 

But if bank is not deducting even a small portion from principal and not even giving the explanation then you can approach banking Ombudsman or consumer court.

Shoping EMI is not an option it will affect you adversely by lowering your CIBIL score.

Changing loan provider will not help you much in this case.