Rejecting a set of four complaints relating to the a bank debiting difference in the interest amount arising out of the increase in rate of interest on loan, the Thane District Consumer Redressal Forum has held that the bank was right in its action.
In its recent order, the President of the Forum Sneha Mhatre and Member Madhuri Vishwarupe, observed that the Thane Main Branch of the State Bank of India was right in recovering the different in the interest rate on the personal loan as the loanee had in their agreement at the time of obtaining the loan sought for “Floating Rate of Interest”.
In their complaint the foursome Prakash sawant, Prakash Otavnekar, Anant Mahadik, and Vilas Fadtare all residents of Thane stated that they had taken the personal loan of Rs. 1,98,000, Rs. 72,000, Rs. 2.08.000 and Rs. 1,20,000 respectively in 2006 and repaid the entire loan amount in 2011 itself.
However the bank without intimating to them debited an additional amount of Rs. 15,000, Rs.14,000, Rs. 20,000 and Rs. 14,000 respectively from their accounts and closed their accounts in 2013.
The four challenged the banks action of debiting additional amount towards different in the interest payable and said that the bank had erred in as much as it has not not intimated to them before the debit to their account. Hence they sought the refund of the amount so debited along with interest.
In their complaint the complainants stated that the action of the bank of debiting the amount amounted to deficiency in services. They also claimed that between 2011 and 2013 the bank did not not respond to their complaint and hence the complaint to the forum.
The bank appeared in the Forum and contested the complaint and came out with the argument that the complainants had in their agreement which was signed by them opted for floating rate of interest on the loan taken by them. Hence the bank argued that it was right in recovering the short interest arising in the change of interest rate from the account holders.
The interest rate increased from 10.25/10/75% to 15.00% and hence the bank recovered the difference in the interest amount from the complainants the bank argued.
In their order the forum noted the paras in the agreement which stated, “The borrower shall repay to the Bank, the amount of the loan together with interest as per arrangement / sanction letter which forms part of this Agreement in 60 equated monthly installments (EMI) , which numbers, however, subject to change depending upon changes in rate of interest (in floating rate loans) and any other debits raised in the account like insurance charges,
fees, etc.The forum upheld the argument of the bank which pointed out the para in the agreement which stated, “The Bank is entitled to increase or decrease the amount as well as number of EMI which comprise of principal interest at its sole discretion either on account of change in interest rate or otherwise and the born undertake to pay EMI as determined by the bank till the time the entire loan together with interest and unpaid penalty, costs, charges and
expenses is repaid”
Hence the forum held that the bank was right in recovering the difference in the interest arising out of the change in the rate of interest on personal loans.