CHANDIGARH: Deciding a complaint filed by Panchkula resident Birbhan Goyal, the consumer forum held on Tuesday that enhancement in the rate of interest in case of home loan is illegal and unwarranted. Imposing a penalty of Rs one lakh, which the bank will pay to Goyal, the forum said, ‘The bank is directed to overhaul accounts of all its loanees and bring the rate of interest at par with those at which the loan (home) is advanced to new customers from time to time, so that all its customers, whether old or new, who have opted for adjustable rate of interest pay the same rate of interest during any particular period.’

Stating that the finance company and the bank adopted unfair trade practice, the forum, headed by Jagroop Singh Mahal, held, ‘Whenever enhancement takes place, the rate would not be more than that at which loans are being advanced to new customers, meaning thereby that if after enhancement, loan is advanced to any new customer at a lower rate, the rate of interest of the complainant and all other loanees would also come down to the same level.’

After completing all formalities needed to avail a loan, Goyal entered into an agreement with a home finance company and the bank. A loan of Rs 37 lakh, which was to be paid in 180 instalments in a period of 15 years, was sanctioned and he started paying the instalments from March 2005 onwards on a regular basis. However, a letter took him by surprise in August 2008. The letter allegedly stated that the repayment schedule through EMIs was being revised to increase the repayment time from 180 to 502 months. He immediately approached the bank?s local branch and requested cancellation of the payment rescheduling but to no avail.

Denying allegations, ICICI Home Finance Company Ltd and ICICI Bank Limited, in their written reply, pleaded that the complainant had opted for floating rate of interest and due to increase in it, they had increased the tenure of repayment of monthly instalments to reduce the financial burden on Goyal.

Arguing before the forum, Goyal’s counsel stated that the finance company and bank adopted unfair trade practice by increasing rate of interest for old customers at a higher rate, whereas the prevailing rate of interest was much lower, which was depicted through their announcements and advertisements in the newspaper to attract new customers.

After hearing the pleas, the forum held that the interest rate of any old loanee would be lowered to bring it at par with the interest rate at which the loan is advanced by the bank to its new customers.