Banks must notify customers about changes in interest rates transparently as per RBI and BCSBI guidelines.

JUDGMENT :

Viju Abraham, J.

The above writ petition is filed challenging Ext.P1 order passed by the 1^st respondent-Banking Ombudsman. The brief facts in the writ petition are as follows: The petitioner’s wife late Dr.Sindhu K.C. has availed a housing loan under the “Subha Gruha Scheme” from the 2^nd respondent Bank. It was agreed that the loan was for a principle sum of Rs.7 Lakhs, which is repayable with interest at the rate of 7.5% per annum on floating rate basis and the same was agreed to be repaid in 168 equated monthly installments [EMI] of Rs.7,742/- each from October, 2005 and the petitioner was the guarantor for the loan advanced by the 2^nd respondent. The petitioner submits that the EMI was regularly deducted at the rate of Rs.6,742/- every month without any default. When exorbitant amount was charged on the loan account, the petitioner apprehended a change in interest and sought information in this regard, to which Ext.P3 reply was submitted, wherein it was declared that the Central Assistant Public Information Officer of the respondent Bank is not obliged to provide any clarification, because the information sought does not exist in any available documents or file. Later, petitioner submitted a request before the 2^nd respondent for issuance of a closure certificate pointing out that the petitioner had paid all the EMIs as per Ext.P1 and sought for release of the security furnished. While so, the petitioner got information over phone stating that there was an overdue amount to the tune of Rs.3,99,979.45 with accrued interest. The petitioner sought clarification vide Ext.P5. Petitioner’s case is that though as per Ext.P1 the interest rates were agreed to be on floating basis, the 2^nd respondent Bank had to make such intimations duly, when the rates of interest changes, which has not been done by the respondent-Bank.

2. Reliance was placed on Exts.P6 & P7 Circulars issued by the Reserve Bank of India [RBI] and the relevant pages of the Banking Codes and Standards Board of India [for short, ‘BCSBI Code’] and the Code of Commitment to Customers, 2014. Ext.P6 mandates that Banks have the freedom to offer all categories of loans on fixed or floating rates, subject to conformity to their Asset-Liability Management (ALM) guidelines and the methodology of computing the floating rates should be objective, transparent and mutually acceptable to counter parties. Relying on Ext.P7, the learned Counsel for the petitioner submits that if at all any change is made in the rates of interest, that should be informed to the customers either by way of a letter, e-mail or SMS and also display the same in the notice board of the Branches and also in the website of the Bank.

3. The specific grievance raised by the petitioner is that the rate of interest was changed without any such intimation as mandated in Exts.P6 & P7. Aggrieved by the same, the petitioner approached the 1^st respondent-Banking Ombudsman raising a complaint. During the course of the proceedings, the 1^st respondent issued various advisories and in one of the advisories, the Bank was advised to reverse the excess interest applied, ie. the difference between Benchmark Prime Lending Rate [BPLR] and Marginal Cost of Funds Based Lending Rate [MCLR], to the account of the petitioner and also advised the Bank to pay Rs.50,000/- to the petitioner as compensation for the lost time and mental agony, as evident from Ext.P10. The learned Counsel on both sides submit that the Bank has complied with one of the advisories and credited the excess interest [difference of BPLC to