On January 18, 2000, Citibank approved Mahendra Mehta\’s home loan of Rs 2.23 lakh. The loan was granted at an interest rate of 14.6% and the monthly installment was Rs 4,241. It was to be repaid over a 21-month period and Mehta submitted the requisite documents to the bank. According to Mehta, he paid all the installments on time. However, the bank sought an additional three months\’ installments amounting to Rs 12,723. He paid the amount.

Mehta alleged that on March 22, 2007, he received a notice from the bank stating that he still had to pay back Rs 30,000. On April 2, 2007, Mehta sent the bank his reply and said there was no such outstanding amount on the loan. He also sent the bank an email and sought a refund of the excess amount of Rs 12,723, along with interest. The bank did not return the amount. In June 2007, the bank sent Mehta another letter, stating that the monthly installment was Rs 4,366 and not Rs 4,241 and hence, he had to pay an additional Rs 30,000. Mehta then sent the bank a notice through his lawyer and said that he would not pay this amount and once again, sought a refund of the three extra installments paid.

On March 3, 2008, Mehta filed a complaint in the forum. The bank filed its reply and said that since the RBI had hiked loan rates, Mehta\’s monthly installment was also increased. It argued that Mehta had availed a floating interest loan and not one on fixed interest and hence there was a change in the interest rate. With respect to Rs 12,723, the bank said that the installments of January 2002, July 2002 and August 2002 were not paid.

The forum said the loan approval order proved that the interest on the loan was 14.6% and the installment was Rs 4,241 and there was no mention of floating interest in the order. This established the bank\’s version as false and dishonest. The forum stated that had the loan approval order mentioned floating interest between 2002 to 2007, the bank would have changed interest rates and not accepted just Rs 4,241 from Mehta.

The forum held the bank guilty of deficiency in service.

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