Magma Fincorp Ltd — increased rate of interest without taking consent for housing loan

Address:

Ahmedabad, Gujarat

Respective authority,

We already sent detailed mail on Date: Thu, 19 Jun 2014 22:07:19 +0530 covering issue subject to the higher rate of interest than committed in the housing loan proposal.

Again same mail for your ready reference mentioned below kindly look and revert as soon as possible.

Regards,

Harnarayan soni


Dear Magma Fincorp. / GE country wide team,

Pursuant to your mail, firstly we wish to draw you kind attention for failed commitment from your side not arranging even a single call or meeting with client in last ten years. We are here completely and strongly deny the company's claim of having rate of interest of 23.3095 % with tenure of 158 installments received today via email attachment as called amortization schedule
Even how magma did had power/authority to take any decision regarding increase of the tenure and rate of interest, despite intimating us as we made loan agreement with the GE countrywide and real borrower with the GE countrywide.
Couple of times issued raise by us in black and white but all in vain for the proper, reasonable and satisfactory answer from your company.
Firstly showing lucrative and rosy picture by your marketing experts to take the loan by comparing lower rate of interest with other companies at the reducing rate of interest which were later smartly converted in to floating rate of interest and increase at very high rate of interest now and then, and played number cruncher game with common innocent people.
It is very surprise for us to receive mail dated 18th june 2014 from MAGMA regarding the loan tenure and the rate of interest mentioned in the email attachment for the housing loan, there are lots of discrepancies regarding issues on the loan, rate of interest, type of interest - reducing or floating, tenure and consent of the parties for increase of the huge high interest rate etc. previously GE country wide was in the picture and now magma here to throw cold water on our enquiries by having fair role to play negatively.
Table showing variable in the calculation and commitments by two separate NBFCs
Sr no.
Particulars
GE countrywide
Magma Fincap
1
Rate of Interest
11.62 %
23.3095 %
2
Tenure
120 months
158 months (current mail dt 18/06/2014)

3
Loan Amount
Rs. 6, 05, 000/-
Rs. 6, 05, 000/-
4
Total repayment
Rs. 13, 08, 240/-
Rs. 17, 22, 516/-
5
Interest Amount
Rs. 7, 03, 240/-
Rs. 11, 17, 516 /-

From the above table it is clear that with the short span of period the loan amount with the interest derived differently in the amortization schedule chart delivered by both companies GE country wide and Magma and did not hesitate to increase rate of interest without consulting or informing to us.
At the time of disbursement of the loan, Rate of interest was 11.62 % which was increase up to 23.3095 % in present amortization schedule emailed by the MAGMA FINCORP. it is serious doubt over the integrity of the company, what is the cap / limit of the interest rate ?
For what the reason a common man has to pay the additional interest of Rs. 4, 14, 276/- (Rs. 11, 17, 516 /- Less Rs. 7, 03, 240/- ) for no reason .
In fact We made the agreement of the 120 months with the installment of Rs. 10, 902/- then how it comes to 158 months, Is there any limit or SKY IS THE LIMIT ?


We already fulfill our commitments by paying regularly without defaulting 119 installments till today what about GE countrywide and MAGMA.

Sorry to comment but we would kindly request you to explain what is the Rule/Formula/Mechanism/Principle for the floating rate of interest if interest rate is counted on the basis of floating rate of interest and what is the Rule/formula/Mechanism/Principle for reducing rate of interest if interest rate is counted on the basis of reducing rate of interest ?

Would the GE countrywide or Magma mind to explain that in a year period how many times rate or interest can be increase?
We never thought for pre-closure of the loan before, we were prompted by the company for the loan and company was neither gave proper explanation to our letters mails and communications means nor provide explanation of our all hard efforts in making the correction in interest rate which remained futile during last couple of years .
When current calculation for the interest and principal crossed far beyond the original calculation, our patience has been drowning in red ink. Due to not received proper reply we have no choice but to regret for the decision to stop to making further payment as our role is finished at 120 installments as committed to the GE country wide.
Initially it was GE Countrywide which actually trapped us with its sweetheart deal, even though never approached for the loan but company executive who were running after us to avail the loan and now adversely GE countrywide and Magma violating terms and conditions by charging not affordable higher rate of interest.
The company is wrongly charging us for rate of interest as per amortization schedule which were never promised to pay from our side, company itself breaking the laws of fair practices code for NBFCs introduced by BANKING OMBUDSMAN under the ministry of Government of India.
If company is thinking that client once took the loan and come in tight spot to accept your unnecessary terms and condition then it is complete wrong thinking adopted by company and nothing but had caused mental agony, harassment, and questioning about integrity and commitment of GE countrywide /Magma Fincorp towards fair practices codes guidelines issued by RBI.
Followings are the few questions raised by us, humbly apply the knowledge and do genuinely little efforts to provide authentic answers, failing which we shall be constrained to take appropriate legal action against you both companies GE countrywide and Magma Fincorp at your entire risk and cost including filing complaint before the banking Ombudsman, NBFC department under Reserve bank of India, consumer forum, writ petition at the legal judiciary with ahmedabad jurisdiction.
1. Do your teams are trained and aware with the guidelines released by RBI on fair practices code which to be followed by all non banking finance companies in their dealings with customers?

2. Did all this guidelines published and disseminate the revise code on the company’s websites, for the information of the public?

3. Rates of interest beyond a certain level may seen to be excessive and can neither be sustainable nor be conforming to normal financial practice GE country wide is agree with this ?

4. Does your interest rates are regulated and controlled by any finance department or authorised by the government of India?

5. How many times the terms and conditions are change by GE countrywide/ Magma without informing us?

6. How many letters for communication send by GE country wide in Hindi language? As per guidelines all communication with the customer have to be in a language understandable by the customer.

7. How many times acknowledgment to be given to us for the loan applications?

8. Time frame for repayment tenure is already mentioning for 120 months then why it is increase again and again without the consent of the us?

9. What are the terms and conditions for the PENAL INTEREST decided by the company ?

10. It is compulsory for company to give notice for any change in terms and condition, when rate of interest are increased is there such type of the letter issued from the company?

11. Is there any grievance redressal mechanism to sort out such type of issues?

12. Would GE countrywide / Magma mind to lay down appropriate internal principles for determining interest rates and charges, and transparently disclose it in the loan contract?

13. What is rationale for charging different rates to different periods without informing and taking consent of the client?

14. Reserve Bank of India (RBI) had vide its Circular DNBS / PD / CC No. 95/ 03.05.002/ 2006-07 dated May 24, 2007 advised that Boards of Non Banking Finance Companies (NBFC's) lay out appropriate internal principles and procedures in determining interest rates, processing and other charges did the GE countrywide / Magma fail to achieve it ?

15. Is there any committee set up by the company to decide the interest rate for the housing / housing equity Loan?

16. If rate of interest for loan is decided and increased time to time, kindly let us know which factors are considered in this regards?

17. Is it so that the company shall adopt a separate interest rate policy which means that the rate of interest for same loan and tenure availed during the same period by separate customers would not be standardised ?

In prevent hope that we will get proper solution for the current issued as discussed.


Yours Sincerely,

Harnarayan Soni
Contact number: [protected]
Loan account number: HADH00000736
Unpaid upfront charges: 18650/-
Sanctioned Amount: 6, 05, 000/-
EMI: 10, 902/-
Total No. ENIs: 120
Date of Disbursement: 21/07/2004
Branch: Ahmedabad (GUAJRAT)