A bank does not need to inform borrowers about the change in interest rates, says National Consumer Disputes Redressal Commission

A bank does not need to inform borrowers about the change in interest rates, says National Consumer Disputes Redressal Commission

 

 

A bank is not required to inform the borrowers about the increase or decrease in interest rates when the borrowers have taken loans on floating rate of interest.

 

This has been observed by the National Consumer Disputes Redressal Commission (NCDRC), New Delhi in a recent judgement in a dispute between ICICI Bank and its customer. The NCDRC presiding member Dinesh Singh and member KarunaNandBajpayee, while setting aside a state consumer court order that had held to the contract, said,

 

"A bank can increase or decrease the rate of interest under the floating rate of interest provided for in the loan agreement executed between the bank and the complainant and any additional or further consent from the complainant was not required, the same having been agreed to in the loan agreement itself,"  

 

The history of the case can be traced back to 2019 when the aggrieved customer approached the State Commission, New Delhi against ICICI Bank. The customer alleged that the bank increased interest rate of a home loan and expanded the tenure of EMIs without informing him. The State Commission decided against ICICI Bank with directions to pay Rs. 1.62 lakh along with interest in addition to an aggregate amount of Rs. 1 lakh towards compensation and costs. Aggrieved, the bank filed an appeal before the NCDRC.

 

NCDRC upheld the bank's appeal and observed that "the bank was well within its rights to increase or decrease the rate of interest" as per the floating rate of interest provided for in the loan agreement executed between the bank and the complainant. Any further consent from the complainant was not required, the same having been already agreed in the loan agreement itself, according to the NCDRC order.

 

"There is nothing on record to show that either the bank had fixed the rates of interest in any erroneous way, contrary to the principles and the guidelines applicable or had differentiated between similar situate borrowers in this respect," the order further added. Therefore, findings of deficiency or unfair trade practice on the part of the bank cannot sustain, the order mentioned.

 

NCDRC further observed that the bank had on relevant dates issued notifications for change on its website and also pointed out dates on which reset letters were sent to the customer from time to time.

 

Appeal filed by the bank was allowed and the bank was directed to pay a sum of Rs. 1 lakh to the customer only as a "goodwill and service gesture" without any acceptance or concession of "deficiency." 

 

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