Consumers be aware that banks can deposit EMI cheques before due date if the same is done to ensure that bank receives payment on due date.
While the rationale behind the above arrange is understandable, there are certain inequities here which were not addressed by the commission in the recent matter which came up before that NCRDC (National Consumer Disputes & Redressal Commission).
Pradeep Bhupendrabhai Desai, a businessman, had an account with HSBC.
He averned that the bank sent a letter offering him a pre-approved personal of Rs 5 lakh at an interest rate of 14.95 per cent and one per cent processing fee. The loan would be repayable in 48 monthly instalments of Rs 13,903, payable by the 15th of each month.
The bank deposited the EMI cheques three to four days prior to the due date of the 15th of each month. There were occasions when the EMI instalment was credited two days prior to the due date. The bank also added one extra instalment of Rs 3,346.37 as the 49th instalment. Desai felt aggrieved as his financial planning got upset when the bank deposited the cheque before the due date. Some cheques also got dishonoured due to shortage of funds as he had not made the provision for payment prior to the due date. The bank also penalised him for the dishonour. This continued to happen in spite of his complaints to the bank. Consequently, he was branded a defaulted and his credit rating with the CIBIL also suffered.
Aggrieved, Desai filed a complaint before the Gujarat State Commission, claiming Rs 25 lakh as compensation for deficiency in service along with 35 per cent interest.
The bank contested the complaint, claiming Desai had been explained the system in vogue by which the cheque would be deposited around the 10th of the month so that the EMI would be realised by the bank by the 15th. Accordingly, cheques were deposited a few days in advance to take care to the time it took for clearing. The bank also pointed out that Desai had filed the complaint to avoid his liability to repay the loan amount. The bank explained that the additional instalment of Rs 3,346.37 was towards charges for the overdue payment.
The State Commission observed that Desai was academically well qualified and a businessman. He had signed the documents undertaking to repay the loan, but had defaulted. The Commission concluded that there was no substance in Desai's complaint and that it was devoid of merit. It upheld the bank's contentions and dismissed the complaint. Desai challenged the order in appeal.
The National Commission noted that Desai had admitted having defaulted on repayment of the loan, but had attributed this to be due to the bank's action of upsetting his financial planning by depositing the EMI cheques in advance of the due date. The Commission observed that the entire dispute revolved around the question whether the bank was entitled to deposit the EMI cheque three or four days prior to the due date of 15th of every month. The Commission found that the documentary evidence on record showed that the bank had acted according to customary norms and practice and in accordance with the terms and conditions of loan repayment. The Commission indicted Desai for wanting to avoid making payment till the last minute.
By its order dated July 8, 2015 delivered by Suresh Chandra for the Bench along with V B Gupta, the National Commission concurred with the view taken by the State Commission that there was no deficiency in service on the part of the bank. Accordingly, Desai's appeal was also dismissed.
Now while the complainant may have actually defaulted and had filed the complaint in order to avoid/cover-up his misdemeanor, the commission do not appear to have addressed the objection that the bank has on occasions received payment earlier than the due day (which going by the bank's statement appears to be a distinct possibility). It is difficult to believe that the agreement includes such a condition as that would mean the bank is earning at an interest rate higher than agreed upon and it becomes doubly unfair to the borrower who get duly penalised in case of delays. While the lender should not be put in a position of getting its money later than the due date, the same logic in reverse should apply for the borrower and there should be some foolproof mechanism to ensure the same. Auto debit from bank account is definitely one solution. But the commission should have at least discussed this issue.
While the rationale behind the above arrange is understandable, there are certain inequities here which were not addressed by the commission in the recent matter which came up before that NCRDC (National Consumer Disputes & Redressal Commission).
Pradeep Bhupendrabhai Desai, a businessman, had an account with HSBC.
He averned that the bank sent a letter offering him a pre-approved personal of Rs 5 lakh at an interest rate of 14.95 per cent and one per cent processing fee. The loan would be repayable in 48 monthly instalments of Rs 13,903, payable by the 15th of each month.
The bank deposited the EMI cheques three to four days prior to the due date of the 15th of each month. There were occasions when the EMI instalment was credited two days prior to the due date. The bank also added one extra instalment of Rs 3,346.37 as the 49th instalment. Desai felt aggrieved as his financial planning got upset when the bank deposited the cheque before the due date. Some cheques also got dishonoured due to shortage of funds as he had not made the provision for payment prior to the due date. The bank also penalised him for the dishonour. This continued to happen in spite of his complaints to the bank. Consequently, he was branded a defaulted and his credit rating with the CIBIL also suffered.
Aggrieved, Desai filed a complaint before the Gujarat State Commission, claiming Rs 25 lakh as compensation for deficiency in service along with 35 per cent interest.
The bank contested the complaint, claiming Desai had been explained the system in vogue by which the cheque would be deposited around the 10th of the month so that the EMI would be realised by the bank by the 15th. Accordingly, cheques were deposited a few days in advance to take care to the time it took for clearing. The bank also pointed out that Desai had filed the complaint to avoid his liability to repay the loan amount. The bank explained that the additional instalment of Rs 3,346.37 was towards charges for the overdue payment.
The State Commission observed that Desai was academically well qualified and a businessman. He had signed the documents undertaking to repay the loan, but had defaulted. The Commission concluded that there was no substance in Desai's complaint and that it was devoid of merit. It upheld the bank's contentions and dismissed the complaint. Desai challenged the order in appeal.
The National Commission noted that Desai had admitted having defaulted on repayment of the loan, but had attributed this to be due to the bank's action of upsetting his financial planning by depositing the EMI cheques in advance of the due date. The Commission observed that the entire dispute revolved around the question whether the bank was entitled to deposit the EMI cheque three or four days prior to the due date of 15th of every month. The Commission found that the documentary evidence on record showed that the bank had acted according to customary norms and practice and in accordance with the terms and conditions of loan repayment. The Commission indicted Desai for wanting to avoid making payment till the last minute.
By its order dated July 8, 2015 delivered by Suresh Chandra for the Bench along with V B Gupta, the National Commission concurred with the view taken by the State Commission that there was no deficiency in service on the part of the bank. Accordingly, Desai's appeal was also dismissed.
Now while the complainant may have actually defaulted and had filed the complaint in order to avoid/cover-up his misdemeanor, the commission do not appear to have addressed the objection that the bank has on occasions received payment earlier than the due day (which going by the bank's statement appears to be a distinct possibility). It is difficult to believe that the agreement includes such a condition as that would mean the bank is earning at an interest rate higher than agreed upon and it becomes doubly unfair to the borrower who get duly penalised in case of delays. While the lender should not be put in a position of getting its money later than the due date, the same logic in reverse should apply for the borrower and there should be some foolproof mechanism to ensure the same. Auto debit from bank account is definitely one solution. But the commission should have at least discussed this issue.
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