Misguided by bank in case of home loan
SREESH
(Querist) 15 November 2013
This query is : Resolved
I applied for a home loan to ICICI Bank, Kolkata Branch considering good interest rates and transparency. I was sanctioned a loan of Rs 30 lacs. In this duration 100s of papers were signed by me telling me that these are all formalities and are needed. However when the first disbursement was made then I came to know that the total sanctioned amount is Rs. 33 lacs. When I enquired I was told that the balance 3 lacs is the amount of insurance policy that the bank has paid to the ICICI Prudential company for a full cover of 30 lacs for me for a full tenure of 10 years in single shot. This was never told to me clearly and I cannot bear such a loss. The purpose of bank was to earn unlawful commission from insurance agency at our cost. Also the cost of insurance is much higher than the prevailing market rates. I and my family feels cheated by this unscrupulous activity and seek you help to save our hard earned money. As nobody in the bank replies properly and only assures that the insurance will be returned if loan is prepaid . this is only a way of fooling customers. The bank has not only disbursed 3 lacs wrongly but also charging interest on the same.It is, therefore, requested kindly advice something in this matter so that my loan amount is reduced back to 30 lakhs. Also please the interest charged on this insurance amount should also be waived off.
Kumar Doab
(Expert) 15 November 2013
Within Free Look Period of 15 days from date of receipt of policy the policyholder can cancel the policy.
The company is liable to refund amount of premium paid after adjusting the stamp duty medical charges if any and adverse movement of NAV if it is ULIP.
You have signed the forms with looking at these.
You are at fault.
The banks, insurance companies, CC companies, MF etc are the one not be blindly believed.
Hope the bank has not taken a assignment on the policy in its favor.
The policy schedule supplied to you should show all the endorsements.
SREESH
(Querist) 15 November 2013
"Hope the bank has not taken a assignment on the policy in its favor"
what is assignmet on the policy in its favour.
generally when is the policy documents received
Kumar Doab
(Expert) 15 November 2013
Since bank has advance loan to protect its interest in case of unfortunate event of death of borrower bank might have obtained signature on one document among 100s of papers were signed by you, for assignment of the policy in favor of bank.
After the proposal form signed by you is submitted to insurance company it is checked by Agent, Unit Manager , BM, Operations Team...............Tele calling for verification is usually done at this step.
Thereafter the proposal form is sent for underwriting (financial/medical) to concerned underwriters.
Tele calling for verification is usually done at this step too.
After the underwriters have passed the policy is enforced and policy schedule containing photocopy of proposal form, illustration of returns/benefits/PQIS of policy is sent to policyholder.
If you have not received the policy document then immediately inform in writing under proper acknowledgment to the BM of the Bank which obtained proposal form from you and demand to give copy of the proposal form and receipt of payment.If it was a forced selling or mis selling inform the BM that what it was.
banks are known to obtain delivery of courier and produce it later.
It shall be appropriate to approach your lawyer and provide all details.
Don't delay.
Let your lawyer draft all of your correspondence now.
Bank is under obligation of 'Code of bank's Committeement to Customers' and 'Fair Practices Code'.
Banks are required to give authenticated copies of documents executed by you free of charge. (cf. para 8.11.1 of Code of bank’s Commitment to Customers)
Log onto;
http://www.bcsbi.org.in/FAQs_HousingLoans.html
http://www.bcsbi.org.in/Code_of_Banks.html
malipeddi jaggarao
(Expert) 16 November 2013
While I appreciate the pains taken by the expert Mr.Kumar Doab explaining you each step in the procedure of issuing the insurance document, I would like to add the following:
1. All Banks are engaged in Insurance Business either directly or indirectly to improve their non-interest income.
2. They do obtain policy especially in home loans and educational loans covering the life risk of the borrower.
3. ICICI Bank should have told you this and obtain your consent explaining the benefits.
4. It appears you are not aware of the details/benefits of the policy. Hence you ask the Manager protesting for such debit. Ask him to explain the benefits of the policy.
5. Though it is a practice in the banks to obtain the signatures on many papers before disbursement, the practice is not legal. Furthermore it should not be misused.
6. If you wish to fight, you serve a notice through an advocate questioning the debit of insurance premium and be prepared to close the home loan account with them as their terms are not agreeable to you. This is not so easy as nowadays all banks behave in such a fashion.
7. Assignment is giving the policy as security for the debt borrowed and the assignee is entitled to receive the benefits under the policy. Once the loan is repaid, it will be reassigned in the name of the borrower and from that time he will be entitled to receive the benefits.
8. You are only two options. Verify with the Bank and verify the policy document. If you feel it is beneficial at least to some extent, you accept the same.
9. If you feel you are cheated (in fact you are!) and have ability to close the home loan with the Bank, start legal battle by issuing a lawyer's notice.
K.K.Ganguly
(Expert) 16 November 2013
1. In the said 100s of papers there might have been application form applying for the said insurance which was blindly signed by you,
2. The assignment form also might have been signed by you which means that in your unfortunate demise (god forbid), the insured amount will go to the Bank to the extent of the loan provided by them,
3. Bank is entitled to get your insurance policy assigned to them but you should have the liberty to get yourself insured from your chosen Company,
4. Write to the Bank to refund you Rs.3 Lakhs stating that you will arrange for your insurance policy from LIC to be assigned to them,
5. Mark a copy of the letter to Bank's Ombudsman praying for relief,
6. If no action is taken, you can file a comsumer complaint before the local District Consumer Dispute Redressal Forum alleging deficiency in service and unfair business practice claiming refund of the said amount, damage & cost.
Kumar Doab
(Expert) 16 November 2013
Learned experts have given valuable advice. Kindly follow it.
You should in writing by letter under proper acknowledgement (under seal and signature with date) submit to concerned BM that produced all those 100’s of blank forms/formats to you to sign and demand:
1. To supply you a list of all forms/formats that was arranged by him on dated……………….when you were called to sign the papers for home loan.
You may add that all such blank forms and formats were not explained to you and you were simply asked to sign these if loan is desired. NO copy was provided to you. You are not aware that what and how many papers were signed on that day.
If the office is under CCTV with audio surveillance then you may fine tune your representation as per flow of events on that day. Later if required you may demand the reording.
2. Certified copies of all such forms/formats and relate it with the list and confirm that no toher form/format was given to you and was signed by you.
3. Certified copies of all such forma/formats.
You may also point out that you have not received any insurance policy that he pointed out on dated………………..and neither the copy of any proposal form or any receipt of the insurance policy being pointed out to you.
If the Bank supplies you duplicate policy the Free Look Period should start from date of its receipt.
Once you know the name and type of policy you can decide what is it and what can be done.
The certified copy of the proposal form and receipt and proof of delivery of any insurance policy that has been issued be supplied to you.
At the same time you may obtain the proposal form number from Bank and the insurance company e.g; ICICI Pru and bank
can provide you dispatch detail on the spot.
You may issue strict instructions to the courier to deliver the policy in your hands and may even set a time/date.
It is in your interest to get the original policy in your hands.
You have the discretion to cancel the policy in Free Look Period.
You can buy any Term Insurance that is cost efficient to you and assign to bank as per T&C suggested by your lawyer.
It is felt that Bank might have adjusted the premium from loan amount and that is why you are being charged interest on premium paid for policy.
You may obtain the loan a/c statement showing credits and debits.
You may try and obtain the process stated by bank regarding the issuance of policy on its website or in its branch for customers so that you can establish the violation of its own process later if the need be.
You may go thru the ‘Protection of Policy holders Interest Regulations 2002.’
Guidelines on Grievance Redressal
If the bank claims that policy has already been supplied you should vehemently deny it.
You may still have a relief as pert the judgment at:
http://164.100.72.12/ncdrcrep/judgement/1755413070614132776dailyorder2013-06-22-42-2013.html
J K Agrawal
(Expert) 16 November 2013
File a complaint in Court for an offense of cheating and criminal misappropriation of property and forgery of documents by using your signatures on unwanted papers. At the same time file a suit for injunction on recovery of next installments. Every thing will turn open.
Consumer Courts are also there to help. The banking ombudsman is there to hear complaint.
Do not worry, search a way, The bank will be behind you to settle at your terms.
Parthasarathi Loganathan
(Expert) 20 November 2015
Bank can never divert your loan funds for insurance purpose even with your consent under Housing Loan Head. Insurance Company should refund the premium and bank officials must settle the matter as they know the consequences
