Foreclosure charge on OD Facility
1 year ago
Hi Legal Experts,
Could you please help me understand the foreclosure charges on Overdraft facility. I have an OD facility of 15 lakh from Tata Capital but I have not withdrawn anything hence outstanding amount is "0". I want to close the OD facility as I have applied for home loan and bank is saying to close it to meet the eligiblity criteria. I raised the request to close but Tata Capital is saying that 6.5% +GST would be levied on OD limit within lock-in period. I want to highlight that "Terms and Conditions" pdf shared by Tata Capital at the time of sanction of the OD says foreclosure charges would be levied on "principal outstanding". In my case principal outstanding is "0". I shared the "Terms and Conditions" pdf shared by Tata Capital with customer care, but now they are saying that mail sent at the of sanction says that foreclosure would be on OD limit. We can see that, "Terms and Conditions" pdf shared by Tata Capital at the time of sanction of the OD says foreclosure charges on "principal outstanding", while mail sent at the time of sanction it says foreclosure would be on OD limit, and both the materials are shared by the Tata Capital itself. I have not withdrawn a single rupee, but they are saying to pay foreclosure charges (6.5%+GST) on 15 lakh i.e. 1 lakh, how can I pay 1 lakh rupee, when I have not taken any loan against the OD limit i.e. principal outstanding is "0", Please help.
It is advised that you serve a written complaint to the service and wait for a month for them to response.
Attach all documents necessary and elaborate on every detail you deem essential. If this has already been done by you, you can file a complaint at the RBI ombudsman using the following link given below.
https://cms.rbi.org.in/cms/indexpage.html#eng
According to the rules of RBI you can write the complaint on a plain paper or follow the format given on the website.
The grounds for complaint in your case can be -
levying of charges without adequate prior notice to the customer;
Hopefully this resolves your query, best wishes. Thank you.
If you want to repay the loan before the loan tenure, the lender may levy a prepayment penalty, which is called foreclosure charges. The lender charge prepayment penalty to cover the lost interest revenue from the early closing of the loan. Usually, borrowers need to pay a certain percentage of the loan amount to close their loan account which ranges from 1% to 2% in general.
As 6.5% is a lot, please raise a written complaint with the concerned authorities of the bank or proceed with a legal notice by consulting a lawyer.
Such things being happened frequently. You have two remedies one is to go to the office of Ombudsman and second is to get issue a strong legal notice.
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