Coming down heavily while deciding an appeal against interest charged at an exorbitant rate of 47 per cent on a loan of Rs 62,000 from a Mohali resident, the State Consumer Redressal Commission of Chandigarh recommended RBI to conduct forensic audit of Fullerton India Credit Company and its branches and to impose heavy cost on the firm and other such NFBCs, which are charging exorbitant interest rates from poor consumers and also to cancel their license, if required.
Giving relief to Mohali resident Jasmer Singh (54), the Commission ordered Fullerton company to refund the amounts of Rs 3,000 and Rs 3,500 charged towards Fullerton India Privilege Program Membership Fee and Sampoorna Suraksha Premium and interest at 47 per cent charged and to issue No Due Certificate to Singh with Rs 70,000 as compensation and Rs 22,000 as litigation cost. The company was further directed to deposit Rs 2 lakh at PGIMER, Chandigarh in the Poor Patient Welfare Fund (PPWF) and to deposit Rs 2 lakh in the Consumer Legal Aid Account .
Singh filed an appeal against the Fullerton Company at the Commission after his complaint was dismissed by the Forum on February 13, 2018. As per the complaint of Singh, he took a personal loan of Rs 62,392 from Fullerton India Credit Company on October 14, 2011, which was to be repaid in 36 EMI s of Rs 3,213 each. even after repayment of the loan, the company continued to deduct the installments from his account.
When Singh approached to issue No Objection Certificate and to refund the excessive amount already deducted, the company dilly dallied the matter. The forum, had dismissed the complaint of Singh, following which he filed an appeal at the State Commission of Chandigarh.
In his appeal, Singh argued that forum did not consider the facts as he exhibited all the relevant documents as well as loan agreement, which proved that he had already paid the entire loan amount and rather paid excessive amount. The counsel of Singh argued that charging of exorbitant rate of 47 percent compounded monthly made his financial position worse as despite repaying a total amount of Rs 1,28,520, which is more than double the principal loan amount of Rs 62,392 taken by the company and still the company is claiming Rs 22,143.29 as outstanding from him.
The company in reply argued that against 48 EMIs, Singh had remitted 40 EMIs and 8 EMIs amounting to Rs 27,704 are still due to be paid by him, while as per loan summary schedule to the loan agreement, rate of interest was 47 percent per annum compounded with monthly rest which was duly signed by Singh.
The Commission held that the loan company is charging interest at 47 percent per annum compounded with monthly rest, which is too much to digest by anyone. No doubt, the company party is NBFC and RBI instructions are duly applicable on the company.
The Commission held that, charging of excessive interest, which goes totally against the norms and observations made by the Reserve Bank of India vide guidelines/notifications issued from time to time stating that reasonable interest rate should be charged, the respondent/opposite party indulged into unfair trade practice. Now it is high time, we expect that the Reserve Bank of India should step in to secure the interest of poor consumers and tighten the knot of such free giants, on whom nobody seems to have any control and who are charging exorbitant rates of interest whatever they like.