Under the floating rate plan, the banks will not be required to inform each borrower individually about any automatic change in interest rates, the National Consumer Disputes Redressal Commission (NCDRC) has ruled. It said that the borrowers have already agreed to such fluctuations while executing loan agreements, a report by the Economic Times (ET) said.
“A bank can increase or decrease the rate of interest under the floating rate of interest provided for in the loan agreement executed between the bank and the complainant (borrower) and any additional or further consent from the latter was not required, the same having already been agreed to in the loan agreement itself,” NCDRC presiding member Dinesh Singh and member Karuna Nand Bajpayee said.
The ICICI Bank had approached the NCDRC against the Delhi consumer court’s order stating that the banks cannot change home loan interest rates without taking the borrowers’ consent. Any automatic change in interest rates amounts to “unfair trade practice”, it said.
The bank’s counsel Sumit Goel argued that the state commission’s observations that changing interest rates was “an unfair practice” was uncalled for and must be removed.
The complainant argued that if the bank had notified them about the interest rate change, they would have transferred the loan to another bank with a lower rate of interest, ET added.