DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION-II

Udyog Sadan, C-22 & 23, Qutub Institutional Area

(Behind Qutub Hotel), New Delhi- 110016

Case No.29/2012

Mr. Ravindra Singh

2A/90 GF

Vaishali

Ghaziabad-201010

….Complainant

Versus

ICICI Bank Limited.

Through its Branch Credit Manger

S-26, 27, 28

Green Park Extension

Near Uphaar Cinema

New Delhi-110016

        ….Opposite Party

 Date of Institution    :    19.01.2012   

 Date of Order            :    02.11.2022  

Coram:

Ms. Monika A Srivastava, President

Ms. Kiran Kaushal, Member

Sh. U.K. Tyagi, Member

ORDER

Member: U.K Tyagi

1.      Complainant has requested to pass an award directing the ICICI Bank (hereinafter referred to as OP) (i) to reduce the term of the Home loan to 15 years from 40 years which is unreasonable, malicious on the part of OP; (ii) to give detailed account as to how interest was charged by it; (iii) pass an order which this Hon’ble Commission deems fit etc.

2.      Brief facts of the case are as under:-

The Complainant is aggrieved with the unfair and arbitrary act of OP Bank due to increase in the term period of Home loan from 15 years to 40 years without any prior intimation. The complainant had never defaulted any EMI towards Home loan. The Complainant is a partner of the M/s Raj Construction. Upon loan application, the OP issued offer letter dated 11.11.2006. The terms & conditions for above quoted loan of Rs. 20,00,000/- are exhibited as Annexure-A. The term of the loan was for a period of 180 months i.e 15 years with Floating Rate of Interest (FRR). The FRR at time of sanction of loan was 10.25% further adjustable interest rate was to be determined on the basis of the FRR, which is notified publically from time to time  plus  margin of 0.25%, which is equal to 10%  as applicable at the time of disbursement. On prepayment, the fees @2% shall be charged. Facility letter & above quoted letter was duly signed by the Complainant. During this period, he got the draft of mandatory agreement vide which it was revealed that the OP had increased the term loan from 15 years to 40 years, which amounted to indebtedness for the whole life. Legal  notice was also got served upon OP  for the above arbitrary and unreasonable action. In response to the above, OP also sent reply copy alongwith Facility Agreement executed between OP & Complainant. The copy of the same is annexed at Annexure-D. The complainant was  subjected to exorbitant and unjustified interest component starting from 10.25% to 15% under the guise of FRR.

3.      OP, on the other hand, filed written reply, interalia raising preliminary objections. At the outset, the OP took the defence of Section 21A of Banking Regulation Act, 1949 vide which the rate of interest charged by OP-Bank cannot be  subjected  to scrutiny of courts. As such, the complainant ceases to stand on its own foot in as much as the Complainant had miserably failed to place on record the draft. A Mandatory Agreement through which it had been purportedly communicated to the complainant that OP Bank had changed tenure of home loan facility unilaterally. Pertinently, it is mentioned that the complainant had opted Floated Rate of Interest (FRR) meaning thereby the Complainant/loanee had consented to OP to increase the Rate of Interest (hereinafter referred to as ROI), which is governed by RBI  instructions and market conditions. It is proximate and pertinent to state that as per amortization schedule, the actual term of loan was increased from 15 years to 27 years as on 07.05.2012. The figure of 40 years was imaginarys and whimsical.

4.      OP-Bank vide its reply further explained that FRR is based on two factors- the Prime Lending Rate (PLR) and margin points. Floating Rate of Interest = PLR + margin point. Prior to 2010, the bank used to follow BPLR (Benchmark PLR) which had some degree of subjectivity. As a consequence, to bring more transparency in the banking transactions w.e.f 01.07.2010, Banks have been directed to follow Base Rate according to which the ROI charged by Banks ought to be governed by RBI guidelines. Since the complainant had opted FRR meaning thereby that with the fluctuation in the PLR which is governed by RBI, the EMI of any customer would automatically shoot up, and with a view of to keep EMI constant, the Bank enlarges the term period of said loan. It had been specifically mentioned that “ The aforesaid rate  of interest  would be valid for a period of 30 days from the date of this sanction letter subject to change in FPR. It is also specifically retorted  that the SOA (Statement of Account) could have been requested by the Complainants at any time. The OP-Bank had denied contentions of the Complainant unless specifically admitted to that extent.

5.      In view of the above –OP Bank contended that there had not been any deficiency on its part and complainant miserably failed to bring out the same.

6.      Both the parties have filed written submission and evidence-in-affidavit. Written statement is on record so is rejoinder. Oral arguments were heard and concluded.

7.      This Commission has gone into entire gamut of issues and due consideration was also given to oral arguments.

8.      After going into the details provided by both the parties, the complaint of the complainant primarily stands around the extending the tenure of term Home loan from 15 years to 27 years (40 years as maintained by the complainant). As discussed above, the Complainant had opted out Floating Rate of interest. FRR is further based on Prime Lending rate and margin points, as discussed in detail above. Since, 01.07.2010, the RBI directed to follow method of base rate which is  evolved  as basis, accordingly to which, Bank decides  as to what would be ROI depending upon interalia cost of funds/deposits, deployable deposits, CRR (Cash Reserve Ratio) etc. It comes out that if customer opted for FRR meaning thereby with  fluctuation in Prime Lending Rate, the EMI of the customer shoots up, however, to keep EMI constant, the Bank usually enlarges the term period of loan.

9.      As per terms & conditions of sanction letter at Annexure- which talks about the change in EMI or tenure. For the sake of clarity, the said clause is reproduced as here-

“EMI amount is intended to be kept constant irrespective of variation in AIR; however, ICICI Bank is entitled to increase the EMI at it’s sole discretion. The tenor of the Facilities shall also change as per change in EMI’s.”

10.    On this basis, the OP-Bank increased the tenure of Home loan from 15 years to 27 years to maintain the EMI constant.

11.    As requested by the complainant, the exact chronology of FRR had been shown here in tabular form-

12.    The repayment schedule as provided by OP-Bank is also placed on record as requested by OP vide its prayer in complaint.

13.    After having considered the facts and circumstances in the case, this Commission is of the considered opinion that the OP-Bank has proved the case in its favour with the help of evidence/documents as discussed above elaborately. The OP-Bank had successfully shown that tenure of term loan was extended on account of increase in FRR and to maintain the EMI constant. The Complainant could not produce any shred of evidence to prove case. Hence, the complaint fails and request is rejected.

          No order as to cost.

File be consigned to the record room and order be uploaded on the website.