The Kerala State Consumer Forum has upheld the district consumer forum’s order directing State Bank of India to return the land documents of a Muvattupuzha native as the consumer had already repaid the whole loan amount. As per the complaint of Thomas, he took a Rs 4 lakh loan that was to be repaid in 60 instalments. He paid back Rs 5.18 lakh inclusive of the interest amount and approached the bank for papers of his mortgaged property. The bank, however, demanded more interest and refused to return the papers.
Thomas told the forum that the bank had never updated him about any payments other than the set instalments, but bank officials defended their action stating that the interest rate was fixed in accordance with the prevailing State Bank advance rate and that the rates had gone up compared to the time of availing loan.
The forum found out that the bank never communicated to Thomas about the additional interest rates and hence it could not legally withhold the security documents. The forum noted that if the bank had permission to change the interest rate from time to time, they were bound to intimate the complainant. The customer should be made aware of the variance in the rate of interest applicable and applied to their loan account, and the corresponding impact on the overall repayment structure. Banking code also stipulates that bank should intimate the customer regarding the operation of the terms of agreement on increase or decrease of the rate of interest.