Dear All,
My father took a loan of Rs.14000 (fourteen thousand) from The World Bank in the year 1992 for 20 years to make some structural changes in our house.
When the loan was taken, the lender assigned a bank near our house to pay the monthly installment of Rs.160. But unfortunately the lender took out that bank from their list and there was no other option left with us but pay the installments to MHADA office which is located some 16-17 kms. from our residence.
Hence we defaulted on timely service of EMIs.
Now in the year 2008 we want to settle the outstanding balance, but the problem is now World Bank is asking for a penalty. The total amount including the penalty and interest sums up to a huge amount of 1,30,000 (One lakh thirty thousand).
My questions are:
1) Can World Bank charge so much of interest / penalty??
The explanation given by the authorities is that there is no interest charged by the World Bank and the total sum is principal + penalty.
2) Can any body charge so much of penalty??
3) What is a way out in it?
4) In the year 2000 World Bank has sent us a notice to pay the amount and that was the last communication between the World Bank and us. In the letter they have mentioned that the penalty is Rs.5 for every month and every default. How to interpret it:
a) Does this mean Rs.5 for every month which comes Rs.60 for a year or
b) Rs.5 for first month 10 for second month 15 for third and 20 for forth month which comes Rs.390 for 1st year, Rs.1500 for 2nd year, Rs.3330 for 3rd year, and Rs. 5880 for 4th year and so on…
Please advise me on this…
