ICICI Bank
Housing Loan
- 09-03-2008
- 125
I took the housing loan at floating rate of Interest from the Bank. Currently the rate of interest is 12.75%. The bank offers 12% interest rate to new customers. My complaint is regarding unfair trade practice of trapping its customers. The whole trap is as follows:
a) It is crosssubsidizing new customers by charging higher interest rate from old customers. If it is a benchmarked rate then the old and new customers should be charged the same rate of interest which obviously is not the case.
b) To answer the question as to why am I trapped. I can indeed shift my loan to any other bank but ICICI has intelligently blocked my exit by putting a clause of ..
1) "you can part prepay any amount but will have to hold last 12 month EMI in the bank in case you do not want any prepayment charges"
2) "if you want to foreclose the loan, it will charge a foreclosure fee of 2% of principle outstanding and not as of today but in the last 12 month" - hefty fee by any standard.
Therefore in case 1) Since no bank will give you money with papers coming 1 year down the line, you continue with ICICI and pay hefty interest. Also you will have to figure out your own source of fund to prepay
In Case 2) You will end up paying a very high foreclosure charges. Also since the rate of interest is not really a benchmarked rate of interest and floating rate in the current inflationary scenario -other banks could also end up treating you in the same manner as ICICI bank.
Hence my complaint of Unfair trade practice of trapping its long term customers and cross-subsidizing loan for new customers. This is sort monopolizing and I am surprised that RBI and government is allowing this sort of behaiour of the banks.
I am sure that this is not just my issue but of lot of home loan takers... and particularly of those who have taken loan from ICICI bank.
One other instance of high interest rates... is that while HDFC and SBI reduced the interest rates ICICI did not. At the same time when everyone increased the rates ICICI was at the forefront and did similar increases. Therefore currently its interest rates are far higher for existing customers as compared to other customers.
Company: ICICI Bank
Country: India