Loan Agreement Provides For Change Of Interest Rate ; No "Unfair Trade Practice" :NCDRC
The National Consumer Disputes Redressal Commission (NCDRC) bench comprising Mr. Dinesh Singh as Presiding Member and Justice Karuna Nand Bajpayee as Member disposed of an appeal that arose out of a consumer complaint filed by an individual(complainant/respondent) accusing ICICI bank (appellant) of unfair trade practices. This complaint was initially filed before the District Commission,...
The National Consumer Disputes Redressal Commission (NCDRC) bench comprising Mr. Dinesh Singh as Presiding Member and Justice Karuna Nand Bajpayee as Member disposed of an appeal that arose out of a consumer complaint filed by an individual(complainant/respondent) accusing ICICI bank (appellant) of unfair trade practices. This complaint was initially filed before the District Commission, but the same was returned by the forum due to lack of pecuniary jurisdiction. It was then taken to the State commission which allowed the complaint and ruled in favour of the complainant which led the bank into filing this appeal at the national commission.
The issue raised by the complainant was that though the bank initially charged interest at the rate of 7.25% per annum, but later on it increased the rate to 8.75% without intimating the complainant or taking his consent. The rate was again raised to 12.25% and the tenure was also increased from 240 months to 331 months. Due to this arbitrary act by the bank, the complainant foreclosed his loan and went to another bank for the same. The complainant initially approached the bank, followed by the banking ombudsman which yielded no results, and this led him to file the complaint. The main defence adopted by the bank before the State Commission was that the interest rate and the number of EMI's were increased in accordance with the provisions stated in the loan agreement between the bank and the complainant. The said agreement provided for floating interest rate of interest and the same was signed by the complainant.
The complaint was allowed by the State Commission mainly due to the fact that the complainant's consent was not obtained before changing the rate of interest and for not informing the complainant about the changes in the rate of interest from time to time. An appeal was filed by the bank against the decision give out by the State Commission as they were mandated to pay 1,62,093/- INR alongwith rate of interest by 30.06.2021 and if they fail to do so, the rate of interest was to be increased by 3%.
Before the NCDRC bench, the bank submitted that loan agreement between the bank and the complainant provided for floating rate of interest. It only changed the rate on the basis of its standard policy which was also applicable to similarly placed borrowers including the complainant on the basis of similar loan agreements. With regard to informing the complainant or any other similarly placed borrower, the bank placed its relevant notifications in the public domain on its website and also sent reset letters to the borrowers including the complainant from time to time whenever the rate of interest was changed. The bank also alleged that the State Commission labelling the act of changing the interest rate as an unfair trade practice is bad on both facts and in law. It however submitted that it was ready to pay 1,00,000/- INR to the complainant purely as a goodwill and service gesture.
The learned counsel for the respondent (complainant) agreed with the fact that change in rate of interest was in accordance with the loan agreements executed between both the parties. However, the grievance of the complainant was that he was not informed of the said change in rate of interest as well as the number of monthly instalments. He also submitted that the complainant never received any reset letter from the bank.
The NCDRC bench opined that the act of the bank was well within the rights granted to it in the loan agreement. The bank's act was not in any way contrary to the established principles and guidelines and they had also not differentiated between similarly situated borrowers in this respect. With regard to the contention raised by the respondent that he had not received any reset letter, the bench stated that relevant notifications were put in the public domain and stated that the bank gave more solid backing to their statement that the reset letters had been sent as opposed to the complainant. They also stated that, since monthly instalments were being deducted from the complainant's bank account towards repayment of his loan, a reasonable man of ordinary prudence would have gathered that there was a change made to the existing repayment schedule. Thus, it was decided that findings of unfair trade practices in part of the bank could not sustain. The State Commission was directed to release any amount deposited by the bank in compliance with the previous order after verification of payment of a sum of 1,00,000/- INR by the bank to the complainant and the complaint was finally dismissed thereof.
Case Title: ICICI BANK LIMITED Vs Vishnu Bansal