Prepayment penalty on cash credit
M P Singhania
(Querist) 15 April 2014
This query is : Resolved
I have seen in a link a link where I have seen your views and it is clearly mentioned that Prepayment penalty cannot be charged as per the RBI guidelines which you have to find out from the guidelines
I have taken a CC limit from Axis Bank and the main points are given below:.
1. I have never approach Axis Bank for the Cash Credit Limit as I was approcah by the Branch Manager along with his staff Mr. Suman and convince me to transfer the loan from State Bank to their Bank and will give me better facilities like increase of CC Limit in my acconts. Then I have decided to transfer the loan from SBI to their bank.
2. After submitting all the papers, I have received sanction letter along with so many agreement letters and in good faith,I have signed all the documents and at the time of signing the documents, the Branch and officers who came from Guwahati has never informed me that Prepayment penalty charged will be applied as per Bnak's decision and it is ia clear case of misleading the customers. Of course, they may say thet I should have gone through the papers before signing but I ahve taken loans from so many banks and no banks have ever charged me Pre payment penalty as when sgifting the loan from SBI to their bank, SBI has never charge Prepayment penalty.
3. the main reason of transfering my loan from axis bank to IDBI bank was I was not happy with the day to day query from Axis Bank and told me that my account is not functioning well as per the terms and conditions of the sanction and also my Marak Supply & Agencies was sanction by Rs. 1.20 Crore and they have released only Rs. 60 Lacs and Rs. 60 Lacs they kept for further orders to be received by me and on the basis of that they will released the amount. During the Month of February 2014, I was urgently in need of that Balance amount of Rs. 60 Lacs and requested Branch Manager to release the amount. The branch Manager told me that Head Office is not permitted him to releasing the amount and requires copy of the orders in hand. Accordingly I have sent copy of orders in hand worth Rs. 2.0 Crores but still they have refused to released the amount and rang me that they are not satisfied with my account and may call back the limit.
Since I was in urgent need of fund, so I approach IDBI bank for take over of the loan and IDBI has given better facilities with enhancement of Limit than the Axis Bank and I have submitted my papers to IDBI who had sanction my loan within 20 days and paid the loan amount of Axis bank. But axis bank refuse to take the amount on the 31st March and we had to close the account on the 3rd April 2014.
Now I have applied for release of my documents but they have refused to released the documents and asked me to pay the Prepayment charges of 2% i.e., Rs. 6 Lacs. This is also arbitrarily. How could they charge 2% arbitrarily why not 3% or 10%.
As I have mentioned above and send you the link, Kindly open it and it is clearly mentioned that Prepayment Penalty charge cannot be charged as per RBI Guidelines and we can complain toBanking. Ombudsman.
I request you to kindly prepare a nice and effective legal notice with all the valid points that under what circumstances we had to shift and also it is always with the customer if they get better facility in other bank, they can always shift the account by paying the loan account with interest as I had done with SBI.
As I have seen your views that Prepayment Penalty cannot be charged on loans given by banks as per RBI Guidelines and I was searching the RBI Guidelines but could not get it. May I request you to kindly help me to get the RBI Guidelines on this Prepayment of Loan so that I can show to the Axis Bank to return all my papers.
It is my personal request to you to kindly help me in this matter.
