Banks must preserve their promise

Pushpa Girimaji

I got a car loan from a public sector bank in March 2015, according to which I was to be charged a fixed rate of interest for one year, and thereafter, on a floating rate. However, the bank charged me a fixed rate of interest throughout the repayment period. To my complaint in 2020, the bank sent a copy of the sanction letter where there is no reference to the floating rate at all and only a fixed rate is mentioned. However, the first and second pages of the letter which mentions the rate of interest, do not carry my signatures nor that of the sanctioning authority. I must also mention that even though I have repaid the loan fully, I have not yet got the NOC from the bank. What should I do?

There have been many complaints of banks promising a loan on a lower rate of interest and then going back on that promise. It’s for this reason that you must read all loan documents carefully before signing these and keep a copy with you. As per the Reserve Bank mandate, banks must provide the customer a copy of the loan documents, including the sanction letter.

In your case, it seems like the bank did not give you a copy of the sanction letter — a clear case of deficiency in service. Further, there is a difference in the rate of interest promised and charged — an unfair trade practice. And from what you say, the bank has even indulged in a fraudulent practice — it seems like they have replaced the first two sheets of the sanction letter that specified the rate of interest. The fact that these two pages do not have your signatures nor those of the sanctioning authority, proves that there’s been some mischief and this will come to your aid in your complaint.

Since you have already complained to the bank and have not got a satisfactory response, you can now send a complaint to the Banking Ombudsman. In a number of cases where banks have charged higher rate of interest on loans on some pretext or the other or have gone back on their promises, the Ombudsmen have intervened and ensured justice.

As far as the ‘No Dues Certificate’ is concerned, the bank ought to have given it to you soon after you repaid the loan fully. Send them a letter demanding the certificate. If they do not give it, that can also form part of your complaint to the Ombudsman.

Can you quote a decided case that can help me?

I looked through some of the annual reports of the Banking Ombudsman Scheme to see if there were any cases similar to yours. I did not find any. So let me quote instead another instance of an unfair trade practice indulged in by a bank with regard to the rate of interest on a loan.

In this case pertaining to a home loan, the bank asked the customer to deposit a one-time fee of Rs6,239 for reduction in the rate of interest. Even though the customer complied, the interest rate was never cut. After three years, when the customer learnt of it and protested, he was told that he never made the required payment and was asked to deposit Rs5,589. He did and this time the bank reduced the rate of interest, but with prospective effective. When the customer came up with proof of his having paid Rs6,239 earlier, the bank said he had made the payment without a mandate for reduction in the rate of interest!

The Ombudsman said first of all, the bank should not have accepted the money without a mandate. And after accepting it, not reducing the interest rate constituted negligence. The bank must refund the excess amount of interest charged, the Ombudsman held. (Annual report 2015-16, Exemplary cases).

You have a strong case and you must get back the excess amount collected by the bank.

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