[Resolved]  Ing Vysya Bank — Unfair Practices -Home Loan

Dear Sir
I had taken a home loan from ING Vysya Bank Limited of INR 46L in early 2008. The disbursal at that point was done at 10%.

I would like to compalaint about the bank on the following issues:

1. High Interest Rate: The current interest rate being charged on my home loan is 10.25% which is indiscriminately higher (higher by about 150-200bps) than the current prevailing rates in the market (or) infact rates being offered by the bank for new loans. I would like to note that this is extremely high because:

a. RBI has reduced the CRR (from 8% to 5%-recent increase to 5.75%) / Repo (reduced from 8 to 4.75%)/ Reverse Repo (reduced from 6% to 3.25%) rates to help banks reduce interest costs of their customers
b. Competitor banks/ FIs like SBI, ICICI, HDFC have reduced home loan rates to 8-9%
is offering home loans to new customers at 8-8.5%.
d. Please note that this is a joint loan (me and my wife) and the risk profile of our loan would be one of the lowest given the below:
- Our credit track record is impeccable
- We both are MBAs and work for respectable MNCs
- Practically, NIL chances of default based on the current income trend
- We fall in the age bracket of 28-33 yrs clearly demonstrating future ability to repay the loan

My home loan interest on the contrary was increased to 11.25% in Jul 2008 and was only reduced to 10.25% in mid of last calendar year, which is significantly higher than when it was disbursed, which to my mind should have been reduced to 8-8.25% in line with the soft interest regime being maintained by the Central Bank and also the fact that the rates are floating in nature.

I had requested the bank to kindly take the above into consider a further reduction in home loan interest rates given the above, but no clear explanation was given despite repeatedly writing to them. As a customer of the bank I fail to understand why higher interest is being charged to me when:
- From a risk profile perspective: I have already written about our future ability to repay. I would tend to assume that my risk profile would attract lower capital hence lower interest rate. I would also like to note that there have been so far no delay of payment from my end and infact I have partially prepaid a portion of the loan
- From prevailing interest rate scenario: Clearly the Central Bank wants all the commercial banks to maintain a soft interest regime which is not being followed by the bank for old customers, which is discriminatory in nature

The bank's pricing seems to be completely non-transparent in nature and I as a customer am not sure why are high rates being charged to me and why are concept of floating rates only applied while increasing the interest rates and rates seem to become sticky when the rates are to be brought down by the bank.

2. Un-acceptable Practices amd Mis-selling: When the home loan was sold to me, one of the key selling propositions was the ability to pre-pay (or) foreclose the loan post 6 EMIs. This is one of the main reasons why I choose to take the loan from this bank as compared to HDFC (which is a much reputed player in this product)
From Sanction Letter of ING Vysya Bank, dated 14th Mar 2008, Point 10:
QUOTE
Over 6 months, partial prepayments are allowed any number of times subject to a minimum of 3 times of EMI and continuation of 12 EMIs.
UNQUOTE
Subsequently, this was covered in the loan agreement as well, where this was confirmed to me by your bank’s sales personnel that the whole loan can be repaid or foreclosed after 6 months of EMI repayment. Further to that after more than year of taking the disbursal, I was shocked to receive one way unilateral communication from the bank dated Apr 2009, whereby:
a. The prepayment per year was limited to 25% of the principal outstanding
b. The penalty was increased to 3%, which was not mentioned at all in the home loan agreement

It so seems that this proposition of ability to foreclose (or) pre-pay was used as a hook to attract new customers like me and then change it suit the bank’s requirement which is clearly unfair and unacceptable.




I have written to the bank several times, but no clear justification (or) resolution was provided for resolving this issue, especially on why was pre-payment facility removed, which is clearly adventageous to the bank but clear highly unfair to a customer like me. I would request your kind intervention on the following:

- Allow me to shift my home loan to another bank under the old conditions of the sanction letter without any penalty
- and, direct the bank to have transperent pricing policies in line with the risk profile of the customer and reduce my pricing till the time the loan is not shifted.
- Also, reimburse high interest charged at 150bps for the last calendar year.

Looking forward to your kind support in ensuring that we are fairly treated in this matter.

Thanks and Regards
Debarshi Roy Chowdhury