• Bank charging higher rate of interest

Availed Home Loan,  The account opened under fixed rate of interest. After eight years, bank changed the interest rate to floating rate and charged a lumpsum amount of 3.17 lacs as arrears from day one of loan. Repeated requests to the Bank have not received from the bank and also not furnished the details how the arrears was arrived. what is the remedy?
Asked 1 year ago in Business Law from Pudukkottai, Tamil Nadu
1) complain to bank ombudsman against the bank charging of floating rate of interest on fixed interest loan availed by you 

2) if no action taken file complaint before consumer forum against bank for unfair trade practice and seek detailed break up of arrears demanded and also to set aside demand made by bank 
Ajay Sethi
Advocate, Mumbai
23328 Answers
1220 Consultations
5.0 on 5.0
Hi sir/madam, The rate of interest accrued on the basis of availed loan date and it will be continued end of the last day i.e., repayment fully satisfied. If they are not furnished details of loan varying from old and new rates, you have to issued a legal notice for the same, if the bank has failed to complied the demand of notice, you have to file petition before the consumer forum for deficiency of rendering service to you and the Hon'ble Consumer forum will be able to give justice in this matter.. 
C. V. Jadhav
Advocate, Bangalore
262 Answers
3 Consultations
3.8 on 5.0
1. How are you sure that the Bank had sanctioned you Home Loan at fixed rate of interest?

2. Does the sanction letter mention that the rate of interest is fixed?

3. Do you have any statement of account wherein it shows that the Bank has charged a fixed rate of interest for a prolonged time,

4. If the answers to the above are yes, then the Bak is not right to convert the fixed rate of interest to floating rate of interest without your consent,

5. File a complaint case before your local District Consumer Dispute Redressal Forum alleging deficiency in service and unfair business practice praying for direction upon the Bank to charge rate of interest which was fixed initially and claiming damage and cost.
Krishna Kishore Ganguly
Advocate, Kolkata
12131 Answers
233 Consultations
5.0 on 5.0
1. If the  interest mentioned in the sanction letter is at floating rate and if the Bank has inadvertently went on charging fixed rate of interest which is less than what should have been charged, the Bank can collect the arrears from date one,

2. The sanction letter is required to be seen for advising on the mtter,

3. However, if the interest rate is fixed as per the sanction letter, file a complaint case as advised in my earlier post. 
Krishna Kishore Ganguly
Advocate, Kolkata
12131 Answers
233 Consultations
5.0 on 5.0
1) bank is bound to furnish detailed statement of account as how interest figure of Rs 3.61 lakhs is arrived at 

2)Charging interest at a rate higher than the rate stipulated in the loan agreement would also amount to deficiency in service.

3)he complaint was filed under section 2(1) and 14 for deficiency in service for charging of interest at higher rate contrary to stipulation of loan the opposite party bank. It was held that the charging of the interest by a bank contrary to the stipulation of loan is deficiency in banking service and the Complainant was entitled to get Rs.5 lakhs as compensation. Complaint allowed. Narayan Rao Mahadeo Manjrekar Vs.Sangli Bank Ltd.& another, CPR1995 (1) 582 (SCDRC - Maharastra)
Ajay Sethi
Advocate, Mumbai
23328 Answers
1220 Consultations
5.0 on 5.0
A complaint was filed by the appellant/complainant before the District Forum alleging that in violation of the agreement between the complainant and the opposite party, the opposite party charged interest which constituted deficiency in service. District Forum held that the complainant was not entitled to reopen the question of interest. In appeal it was held by the Commission that when the bank by an agreement agrees to charge a particular interest on loan then the bank could not unilaterally enhance the interest rate and consumer complaint about higher rate of interest charged would be maintainable. V.Gilbert V/s The Manager, Vijaya Bank (Br.) & Anr - 2000(1) CPR 180 SCDRC (Ker)
Ajay Sethi
Advocate, Mumbai
23328 Answers
1220 Consultations
5.0 on 5.0
The banks cannot unilaterally change the pattern of interest and charge the floating rate of interest on their own instead of agreed fixed rate at the time of grant of loan.  This is high handed illegal act.  You may bring this to the notice of the bank in writing, if there is no response you can make a complaint with the higher authority of the bank and if there is no proper response from them too, you may approach Banking Ombudsman seeking relief, if you dont get a fruitful reply from Ombudsman too, then you may drag the bankers to the consumer rum seeking relief and remedy to the said illegal act by the bank.
T Kalaiselvan
Advocate, Vellore
14138 Answers
127 Consultations
5.0 on 5.0
1) it is necessary to peruse documents cited by you to advise 

2) if your sanction letter and loan  agreement does not expressly mention fixed rate of interest would be charged for loan advanced to you then bank can charge you floating rate of interest 

3) consult a local lawyer 
Ajay Sethi
Advocate, Mumbai
23328 Answers
1220 Consultations
5.0 on 5.0
The bank to protect their employees who did this mistake, will give some flimsy reason and close the complaint because it is after all their internal problem not affecting the banking function or bank's name. But you cannot be taken for a ride due to some official's error hence you can approach appropriate forum seeking relief. The step by step action to betaken was suggested in my earlier post, which you please go through once again.
T Kalaiselvan
Advocate, Vellore
14138 Answers
127 Consultations
5.0 on 5.0
1. You shall have to establish that the interest rate specified initially is fixed,

2. If that is established, you can approach he Consumer Forum as suggested on my earlier post.
Krishna Kishore Ganguly
Advocate, Kolkata
12131 Answers
233 Consultations
5.0 on 5.0
Hi sir/madam, you have to issued a legal notice to the said Bank for the same on the basis of your representation, if they have failed to do so complied the demand notice of yours, thereafter you have to file petition before consumer forum for the same and get relief.
C. V. Jadhav
Advocate, Bangalore
262 Answers
3 Consultations
3.8 on 5.0

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