Consumer Rights

Financial matters, especially the intricacies involved with loans, rate changes, floating vs. fixed, etc can be very confusing to most people; and it seems that banks play on that. People had taken loans induced by the cheap rates that were being offered, and since floating seemed all the more attractive, many floating rates were taken by people who did not understand the full implications of the change in interest rates on floating rate changes. So, when the interest rates started heading upwards, banks revised their interest rates upwards, and in many cases, did not inform the loan holders about the change in rates. This is against policy where loan holders are supposed to be informed in writing that their loan rates have gone up:

Such lapses may occur due to staff inefficiency or system error. A Delhi personal loan consumer since March 2007, points out Sanjeev Talwar of Delhi’s National Consumer Helpline, hasn’t received even his account statement. Some time ago, in Mumbai again, another floating-rate loan consumer discovered that his EMI amount, sourced directly from his account via the electronic clearing system (ECS), had increased without any intimation about a rate hike. Says V M Oza, honourary director, complaints, at Ahmedabad’s Consumer Education and Research Centre (CERC), “There is a provision that rate change cannot be made unilaterally. The bank should inform the customer about it without any hindrance.”
The ombudsman official agrees: “A Reserve Bank of India circular says in case of an increase (in interest rates), the customer must be informed, so if he is not interested, he may be given a chance to repay or shift to another bank which offers a lower rate of interest. In case the bank is at fault (by not informing the customer), it has to take a sympathetic view as this is not in keeping in line with the instructions.”

So, if a customer has not received a change in loan terms intimation from his bank, and is then charged a penalty by the bank, the customer will within his / her rights to ask the bank to waive the penalty due to not having received the new terms. In fact, it is advisable that customers only accept written intimation so that they have the required proof in case of any disputes.

Posted on March 2nd, 2008 under Banks, Consumer, Extra Charge, Finance, Loans. Tags: Banks, Charge, Consumer, Loan, Penalty. RSS 2.0 feed. Leave a response, or trackback.