Dear Mr Basu
I Have availed Housing Loan of Rs 30 Lakh from Corporation Bank during Nov 2009. As per the Sanction letter Rate of Interest for First year 8 % Second and Third year 9.5 % and for future year prevailing interest rate. Further As per the Sanction letter for Second and Third and Fourth year onwards Banker has to intimate the increase in the rate of interest and Refix the EMI. Now Surprisingly I received a Speed post followed by phone call from the Banker to Sign the Balance confirmation and demand promissory note. It is observed from the Letter and Balance that the Banker has increased the rate of interest to 11.75 %. Now Banker is insisting me sign the Balance confirmation otherwise he will initiate the recovery proceedings. And also he is asking me to pay 1 % as charges to reduce the rate of interest to 10.25 % with prospective effect. Now My Question is
1. Whether The Banker is right on his part to ask for the Confirmation for Higher Balance? Should I Sign the Balance Confirmation? by signing will it means I have accepted the rate of Interest?
2. Will it be possible to get the RBI Guidelines with respect to Housing Loan Interest?
3. Is there any way out to get the reversal of Excess interest charged.
Dattatreya-I feel they are completely out of options because of some wrong doing by earlier officials.
1) According to rule, they must inform the customer regarding the hike in interest. This they have not did in your case. This is the first wrong thing they did. To avoid future ambiguity or issues, they are asking you to sign a confirmation letter. Please go through the below link of FAQs mentioned by Banking Codes and Standards Board of India, where they clearly mentioned that bank must inform the customer about rate hike whenever it happens. Hence, I fully disagree about their insistence of forcing you for signing a confirmation letter.
2) At this stage, I am unable to fetch the exact RBI circular or guidelines. However, the below news item (even though the old one), support you.
3) You have every right to not accept their argument of asking for higher interest payment without intimating you. I suggest you to first complain within bank. If they not heed then to Banking Ombudsman.
But they have valid reason to ask for 1% charges for switching your home loan from current rate to new low rate. As, it is purely within RBI guidelines. Other than that point, I felt they are completely at wrong end.