Revision of loan interest rates

Hi, I have a realty loan from SBI disbursed in Jan 2007 for purchase of a site and henceforth construction of house in the same site. Though the document said the rate of interest would be raised from home loan rate to commercial loan rate after two years if the house construction is not started within this time, the rate of interest was never increased from Jan 2009. However, in Jun 2012, I received a letter from the bank saying that they have revised the rate of interest retrospectively from Jan 2009 till date and hence the interest arrears (around 1.5 Lacs) were debited to my loan account. So now, I'm trying to fight with the bank on the following grounds: 1. The fair practice code for lenders says that interest rate increase or any charges levied should be done prospectively after intimating the customer. In my case there was no intimation at the end of 2 year period, instead the website showed home loan rate of interest when I used to login to pay my EMI. 2. The EMI being charged did not even cover the interest part for the increased rate of interest and hence after retrospective recalculation of interest the principal amount never reduced. The outstanding only kept on increasing during this period (jan 2009-till date)

Based on the above 2 points, does my case make sense? Is there any other clause/rule under which I can claim shelter and hence ask the bank to refund the excess interest charged?

Thanks in anticipation

asked Sep 06 '12 at 16:25 by VeeJay 135

As per agreement, bank may be right in computing interest arrears on basis of increased rate, but for not computing it on right time as per agreement, bank should not ask for any extra payment other than correctly computed interest.

If you think you have been cheated by bank, you should complain to Banking Ombudsman. You may check here: Address and Area of Operation of Banking Ombudsman

Compliant can also be made online here: RBI Banking Ombudsman complaint

answered Sep 06 '12 at 23:05 by Pankaj Batra 5.2k320

Thanks for the answer. If I plan transfer this loan to another bank for a lower rate of interest, can I still fight with the current bank to claim back the excess interest? Once I close the account, will the ombudsman/consumer court entertain any claims?
(Sep 07 '12 at 23:38) VeeJay
You may fight case even after loan account closure too.
(Sep 08 '12 at 15:27) Pankaj Batra

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Asked: Sep 06 '12 at 16:25

Seen: 2,492 times

Last updated: Sep 08 '12 at 15:27