Chandigarh

DF-II

CC/127/2014

Jaswant Singh - Complainant(s)

Versus

State Bank of India - Opp.Party(s)

Naveen Singh Panwar

29 Jan 2015

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II, U.T. CHANDIGARH

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Consumer Complaint No	:	127 of 2014
Date of Institution	:	11.03.2014
Date of Decision	:	29.01.2015

Jaswant Singh son of Bharam Singh, resident of House No.195, Sector 30-A, Chandigarh

Complainant

Versus

1] State Bank of India, RACPC, SCO 103 to 110, Sector 17-B, Chandigarh 160017 through its Assistant Managing Director.

2] State Bank of India, Branch: City Sub Centre, Sector 34-A, Chandigarh through its Branch Manager.

Opposite Parties

BEFORE: SH. RAJAN DEWAN PRESIDENT

MRS.MADHU MUTNEJA MEMBER

SH.JASWINDER SINGH SIDHU MEMBER

Argued By: None for the complainant.

Sh.K.S.Arya, Counsel for the Opposite Party

PER MADHU MUTNEJA, MEMBER

1] The complainant had been sanctioned a housing loan of Rs.6.90 lacs in sept., 2006. As per terms & conditions of the loan, an EMI at the rate of Rs.7100/- was fixed for a period of 15 years. The complainant has stated that the OPs have served a letter dated 28.10.2013 to him saying that his account is not regular and Rs.14445/- has become irregular (Ann.C-1). The complainant has stated that he has been depositing sufficient amount in his saving account from which the OPs were making regular deductions and the OPs have never informed him of any change in the terms & conditions of the housing loan or of the change in interest rate. Also no repayment has been adjusted towards principle amount of loan even till the year 2013, whereas complainant is making regular payments of EMIs for the last 7 years. The complainant also issued a legal notice to the OPs in this regard (Ann.C-2). As per the complainant, the Housing Loan sanctioned by the OPs was on a fixed rate of interest and enhancement in the rate of interest by the OPs is wrong and illegal. He has thus prayed that the OPs be directed to re-calculate the EMIs as per fixed rates of interest and also to pay compensation for harassment.

2] Notice of the complaint was sent to Opposite Parties seeking their version of the case.

3] The Opposite Parties in their reply have stated that the complainant along with two other borrowers had approached and requested the State Bank of Indore for financial help, which was later on merged with the Opposite Party Bank. The said bank considered their request and granted Housing Loan Facility of Rs.6.90 lacs on 26.9.2006 on execution of various loan/security documents. The said loan was to be repaid in terms of the agreements along with interest besides the payment of the incidental charges, costs, expenses etc. applicable from time to time. At the time of sanction & disbursement of loan, the complainant as well as the other two borrowers were apprised to their entire satisfaction with the factual position with regard to the facts of rate of interest, which was subject to change as per RBI directives. Inspite of number of requests & repeated demands, the complainant did not bother to repay the due amount intentionally, but raised the issue instead of clearing the total dues against the loan facility availed by them. As per the OPs, the controversy raised by the complainant is with regard to charging of interest. In fact the interest was charged as per the loan documents and guidelines of the RBI issued from time to time. There is thus no deficiency in service on the part of the Bank. The loan is subject to terms & conditions of the agreement and the EMI calculated as per the prevailing rate of interest, which was subject to change from time to time. As the complainant had opted for the floating rate of interest, the EMI was subject to change in accordance with the revised rate of interest as and when applicable. In the instant case, the EMIs were adjusted as per the standing instructions and duly accounted for in the loan account, but the amount paid by the complainant was not sufficient for the regular adjustment of the loan account. The OPs have placed on record the Loan Application, the Agreement Letter and the Term Loan Agreement as Ex.OP-1 to OP-3 in support of their contentions. Hence, denying all allegations of the complainant, the OPs have stated that they have no discrimination towards anybody and the complainant is well aware of the developments in his Loan Account, but has preferred the instant complaint for wrongful gains. The OPs have therefore prayed for dismissal of the complaint.

4] The complainant has filed rejoinder thereby controverted the submission of OPs as made in the reply and reiterating the assertions as made in the complaint.

5] Parties led evidence in support of their contentions.

6] We have heard the ld.Counsel for the OP and have also perused the record.

7] The grievance of the complainant against the Opposite Parties is for excess charge towards interest for loan availed of by him from the OPs. As per the contention of the complainant, he was required to pay fixed EMI of Rs.7100/- for 15 years and the OPs were not entitled to take or demand any further amount from him. The OPs have stated that the complainant had opted for floating rate of interest in the agreement signed between the parties and hence the EMIs of the loan was subject to change as per change in the rate of interest and RBI Guidelines. Ann.OP-1 is the Housing Loan Application cum Appraisa, placed on record by the OPs. As per this document, the loan applied for was for Rs.6.90 lacs. Appendix –IX is the declaration to the said application form, wherein it is stated as under:-

“….I/We further confirm that I/We have read the terms and conditions and understood the contents therein. I/We am/are aware that if I/We opt for loan at floating rates of interest, the Equated Monthly Installment will comprise Principal and interest based on Bank’s Benchmark Prime Lending Rate which is subject to change from time to time.”

8] This declaration has been signed by the complainant along with other two co-borrowers. The rate of interest has been shown as floating and at 2.25% below Benchmark Prime Lending (BPLR), which was then currently 9.25% p.a. Clause NO.4 of the Arrangement Letter – Housing Finance (Ann.OP-2), which deals with rate of interest reads as under:-

“Floating Rate of Interest:-

Interest on the loan will be charged at 2.25% p.a. below Benchmark Prime Lending (BPLR) which is currently 9.25% p.a. (the current effective rate being 9.25% with month rests. The rate of interest is subject to revision from time to time and shall be deemed to have notice of changes in the rate of interest whenever the change in BPLR either displayed on the Notice Board of the Branch of published in news pa… of made through entries of the interest rate charged in the passbook/statement account furnished to you. The Bank has the option to reduce or increase the EMI extend the repayment period consequent upon the changes in BPLR.”

9] Also on record is Ann.OP-3, which is Loan Agreement, signed between the borrowers, which includes the complainant also and the Bank. On the first page itself, it is written that “…granted a Housing Loan of Rs.6,90,000/- (Rupees Six Lac Ninety Thousand Only)......on floating interest rate basis .

10] All documents have been duly signed by all the borrowers including complainant and Bank, so we do not understand as to why the complainant is now agitating about the interest rate on his loan amount. The contention of the OPs is correct about the interest rate on the loan being floating and this obviously implies that the EMI of the loan needs to be changed with the change in the rate of interest. In case there is rise in the rate of interest and the EMI does not cover or barely covers the interest amount, then the principle loan amount does not reduce as has been stated by the complainant.

11] In this regard we need to observe that it was the duty of the OPs at the time of sanction of loan to provide an amortization schedule to the borrowers as well as explain to the borrowers how the EMIs received would be segregated into interest amount and principal amount. A smaller adjustment of principle in the schedule would make the consumer well aware that he needs to increase his EMI to reduce his loan. In this situation, it is evident here that the complainant’s EMIs is so small that he is not paying more than the interest due from him which is why his loan has remained as it is even in 2013. Though the complainant is aware of this fact but he does not seem to fathom the reason for non-reduction of loan. Here, we definitely find the OPs deficient in service as they have not educated the customer about the loan amount and allocation/adjustment of the amounts paid by him towards the interest & principal so that he could understand and realize that payment of a higher EMI will enable him to finish off his loan liability faster, as the excess amount would be adjusted towards principle. At the same time, we cannot pass any order asking the OPs to reduce the interest rate, which is as per RBI Guidelines.

12] It is a fact that the OPs has not even provided any detailed statement of account/amortization schedule to the complainant or before this Forum to clarify about the outstanding amounts, which has left not only the complainant but also this Forum in the dark about the actual outstanding amount and its segregation into interest and principle even today.

For this discrepancy, we are inclined to hold the OPs liable for deficiency in service and unfair trade practice. The complaint is thus allowed. The OPs is directed to supply the complete statement of account to the complainant in respect of his loan account thereby reflecting every entry with regard to deductions already made/to be made towards interest as well as principle amount on the repayment of loan since the date of first sanction. Though we cannot pass orders against the OPs for affixation of interest rate which will be as per terms & conditions of the agreement, we hold the OPs liable to pay a consolidated compensation of Rs.25,000/- to the complainant for deficiency in service. This amount be adjusted in the loan account of the complainant from the date of this order itself, after which the statement of accounts as ordered above be provided to the complainant within 45 days of receipt of the order. The complainant is also advised to examine the statement to realize that he needs to substantially increase the EMI for quicker settlement of loan dues. The amount being paid at present will not adequately help him in his endeavor to finish the loan.

Certified copies of this order be communicated to the parties, free of cost. After compliance file be consigned to record room.