The Ernakulam Consumer Disputes Redressal Commission has directed Kerala State Financial Enterprises (KSFE) to allow a customer to close his housing loan on payment of the balance amount due.
The Commission also directed KSFE to pay a compensation of ₹10,000 to the customer for refusing to let him close the loan and demanding foreclosure charges.
The Commission led by its president D.B. Binu passed the order while allowing a complaint filed by P.T. John of Vaduthala. The complainant said that KSFE had refused his request to close the housing loan on payment of the balance loan amount due and demanded foreclosure charges.
The Commission observed that the circular issued by the Reserve Bank of India (RBI) in 2019 had said that non-banking financial companies (NBFCs) should not charge foreclosure or prepayment penalties on floating rate term loans sanctioned for purposes other than business to individual borrowers. KSFE had displayed deficiency in its performance and delivery of service, falling short of meeting the expected standards outlined in the contract with the complainant and under the law. This deficiency has resulted in negative consequences for the complainant, including mental distress, hardship, and financial losses.
The court also directed KSFE to pay ₹5,000 towards the cost of proceedings to the complainant.
