Need Help – Bad experience with ICICI home loan pre-closure

POSTED BY Vidya Prakash ON January 3, 2014 12:17 pm COMMENTS (10)

Dear Manish,

I have salary account with ICICI bank since past 10 years and had a very bad experience with ICICI bank, Pune for home loan foreclosure and want your help to resolve it else I will lose Rs28,000/=.

I have a home loan at fixed rate with ICICI bank since Jan’2007. Till past week outstanding amount was near Rs12.8Lakhs.

When I asked ICICI person (Deputy Branch Manager) what’s the procedure to pre-close the home loan, he said to give cheque of that outstanding principal amount and there will be INTEREST charge of 2.24% on outstanding amount as my home loan is on fixed rate ( it’s comes to nearly principal amount and additional Rs28,000/= for pre-closure). They said it’s as per RBI rule to charge fixed interest rate customer and waive off floating rate customers.

I was surprise to know this rule and I think it’s discrimination with customers with fixed home loan.

Then just something clicked and I said to ICICI employee, Is there any way to reduce interest rate charges, he said there is no way to reduce it.

Then I proposed what if I make part payments and reduce principal amount so that I have to pay less interest on outstanding amount. He said yeah you can do that, then I blasted him why he didn’t tell this so that it’s less pain to customers. He was just looking at my face and said you can keep minimum amount equivalent to 12 EMIs and pay the rest amount so that you have to just pay 2.24% interest on 12EMIs principal amount (near about Rs 4500/= ). I thanked god that atleast amount reduced from Rs28,000 to Rs4500 (but this happiness didn’t last long).

I made part payments and reduced principal amount to near 12EMIs. When I went to close the loan still they are seeing foreclosure charge of Rs28,000/=.

Even Deputy Branch Manager was surprised and when he called up their helpdesk , he got to know as per ICICI bank rules “Foreclosure charges will be 2.24%  interest on the remaining principal and part-payments amount made in last one year”.

He was in shock to know the exact rule for foreclosure charges, I told him I am not going to pay Rs28,000/= as you gave me incorrect information, you wasted my time and effort in it. He told he will check with higher level if  they can waive it off. Bank manager was on leave that day and this person was his backup.

Next day when bank manager came I explained him the situation and he agreed that there was miscommunication from his employee (Deputy Branch Manager).

Now even bank manager is saying I have to pay Rs28,000/= as it’s per rule. I told him your employee/ Deputy Branch Manager only doesn’t know the correct rules and giving false information to customers, how can your bank customer will get fair services?

I asked for the complaint register then bank manager said let me try once more and will get back to you in 2 days.

Now, I am sure they will not find any solution and will ask to pay Rs 28,000/=

Please let me know whom should I approach  to resolve it. Should I approach to consumer court or RBI to resolve it, any pointers/help will be appreciated.

 I have sold my house and closing loan by using this money.

Regards,
Prakash

10 replies on this article “Need Help – Bad experience with ICICI home loan pre-closure”

  1. kishanm77 says:

    Dear Vidya prakash
    I too agree with Ashal. What you can do now is that you can keep minimal amount as principal and apply for reduction in EMI amount to a minimal nominal amount for 1 year and thus the property will be free after 1 year from now without any extra charges. But if it is very necessary for freeing the property then you will have to bear those charges. I too had faced this situation few years back and had to pay the charges.

    thanks
    KISHAN

  2. Vidya

    always remember few things . Always take things in WRITTEN , not oral , What will you do if they deny that anyone told anyone gave you some advice ? how will you prove it, unless that employee really accepts that he did say any thing to you ? They will say you are just making things up to get the discount .

    So always take things in WRITTEN. Now next point is that bank has their responsibility to communicate things properly, but as an investor did you read all the documents and that the rules and charges in various scenario’s ? I know most of hte poeple dont do that, but suppose if some one asks you later that as your have signed the documents, its legally means that you accept all the terms and conditions hence you must be aware of these rules (in the past 1 yr rules) .

    Now I suggest you open a complain with banking ombudsman regarding the deficiency in service from ICICI bank on giving you wrong informaiton. Other than that part, I dont think ICICI bank is wrong in any ways. You took the loan on FIXED rate, it was your choice. That the price you pay for getting the security of FIXED rates. Also the decision of RBI on floating rate is RBI decision, not the bank

    Manish

    1. Vidya Prakash says:

      That’s true and I have learnt lesson to take written proofs.
      I will log a complain for sure and no issue with RBI rules for fix & floating.

      It would have less pain if in starting only I have known that in any case I have to pay 28K but due to miscommunication I am feeling bad.

  3. ashalanshu says:

    Dear Vidya, in that sense, you should file a written complaint so that a penalty or some action against that Dy. Manager can be taken.

    Thanks

    Ashal

  4. ashalanshu says:

    Dear Vidya, Let’s say, some penalty is levied on that Deputy Manager, how it ‘ll compensate you for your 28000 Rs. which you w’d have to pay any how.

    Just for your info – I was running an ICICI home loan few years back and RBI guidelines were not there. Still I managed to escape the penalty as was aware of the rules. I prepaid in bulk and at the same time, asked to reduce my EMI to 1K only as well as Term of loan to 12 months. After 12 months (paid 12 EMIs of 1K each), I got the loan closed with out any penalty.

    Thanks

    Ashal

    1. Vidya Prakash says:

      Yeah, it will not compensate but it doesn’t mean guilty person should be left without any penalty else no one will care for making mistakes. I was not knowing rules and asked bank employee. I can’t even think in dreams that a Deputy Manager will miscommunicate me.

  5. ashalanshu says:

    Dear Vidya, in your case, the loan was fixed. had you contacted earlier, We w’d have advised you to convert to floating one so that you may get the benefit of RBI guidelines of waiver on prepayment closure. In this case, the conversion from fixed to floating was to be @ 0.56% fee which was going to be very less than this current 2.24%. That’s what We meant. 🙂

    thanks

    Ashal

    1. Vidya Prakash says:

      Thanks…that’s true. But I belived Deputy Branch Manager and I was not knowing that even he doesn’t know exact rule. Is there any escalation points? or paying 28K is last option? Deputy Branch Manager should not be punished for his act?

  6. ashalanshu says:

    Dear Prakash, You w’d have to pay 28000 Rs. to ICICI, unless ICICI decides to waive it off just for you. It’s very much within rules and regulations. had you contaced here earlier, we might provide a solution but now it’s not of any worth.

    thanks

    Ashal

    1. Vidya Prakash says:

      Thanks Ashal for reply.
      What do you mean to say “had you contaced here earlier, we might provide a solution” ?? Loan is till not closed and Bank manager is asking for more time.
      Please provide solution, I will see if it helps.
      Thanks!!

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