Are You taken for a Ride by Bankers while Availing Housing Loans?

  Are You taken for  a Ride by Bankers while Availing Housing Loans?

It is claimed that the banking sector is regulated and controlled by RBI. But how far that control is effective is a question being asked by many. RBI has come out with a dictum that no bank can charge per-payment penalty for early repayment of housing loans. Banks claim that they have adhered to the terse warning by the regulator. But reality is different. They may not be charging a  pre-payment penalty and the procedure for extracting money from the customers are packaged in different forms and hues. I shall explain a few situations, where customers are taken for granted.
Situation one.
One is availing a loan at a specific rate of interest, say 10%. The interest rate falls and the bank announces that the lending rate for housing loans have been brought down to say 9%. Many innocent customers, who must have availed the loan either would not have seen the report or must have thought that it is an automatic process, wherein banks will slash the rate of interest chargeable on the housing loan. To his or her great surprise, the banks continue to charge the same interest rate.
Situation 2
The customer goes to the bank and complain that he is not been given the benefit of reduction in interest rate. He or she is been told that unless they ask for the reduction in writing and signed by the loanee, such requests cannot be acceded to. When the customer asks why, the stock answer is that it is in the contract signed. It is true that such clauses are tucked in some corners, which the borrower overlooks at the time of  contracting the loan. His main concern at that point is to get the loan sanctioned since he must have already paid advance to the builder.
Situation 3  
The borrower applies for the change in interest rate in writing.  He goes by the presumption that there is no  charge payable. He is wrong. The bank charges an amount, which is calculated on the basis of a table and the borrower can switch over to the new rate only after payment of that one time charge, which varies in accordance with your outstanding loan amount. If you argue with the banker, stock comes the answer that it is a part of the contract. Mind you, this amount you have to pay every time you move from one interest regime to the other. On the other hand, if the interest rate goes up, banks without informing you will raise the interest rate.  And if we have to move into a new interest regime, a new contract is signed. I still do not understand why then we have the fixed  and moving rates and options are sought from the customers.
Situation 4
Have you ever calculated how the banks calculate the   equated monthly installments (EMI). You will be in for a heart attack. Of course, the EMI amount is depending on the loan amount and the length of the repayment period. How it is calculated is the most surprising factor. Assuming that you have taken loan of Rs 30 lakhs for 20 years and you are happily paying the monthly installments without default. After an year or so, you may like to check as to how much capital you have paid off. To your surprise, you find that your capital amount has diminished by a fraction. You might ask the banker why it is  so? He will explain how that has happened. The initial years installments component is heavily tilted towards the quantum of interest. To put in simple language, the banks would have realized their interest component in less than  10 years if the your loan repayment period is 20 years.
Situation 5
Irked by the high handedness of the bank, you raise some money to repay the loan amount either in part or in full. There also you will not have an easy walk. You have to do some paper work. The banks will have to know from where you have mobilized the fund. You have to give your pass book photostat copies and an application for reapayment. Also, the amount has to go from the same account of the loanee. On the top of t, the banks charge an amount which they say to cover up the interest rate for a period if the repayment is partial. Assuming that you are repaying the amount on 8th of a particular month, banks will calculate the interest falling due between 1  and  8 of the said moth. I am not sure what will await a person who wants to repay in full. There may be some charges levied by the banks, as it was the case earlier.
Situation 6
Any mistake on your part either due to cheque  bouncing or any other technical error is penalized by charging more from you. Even if the mistake has happened on account of the goofing up of bank officials, you have to bear the brunt. And with every passing day, you have to pay more penalty.

Hello, is the regulator hearing all these? Bankers have their lobby to take up the issues such as Indian Banks Association (IBA), which is presently resisting the norms issued by the Banking Codes and Standard Board of India  (BCSBI) putting  the  onus on   banks to prove e-frauds. Earlier, the onus of proof was on the customers. They want the status quo to follow and harass the customers for the omissions and commissions  committed by them or their staff in complicity with the fraudsters.
When we are talking about shunning corruption, it also takes in its fold corrupt practices, which have been created to protect some interests at the cost of others. Banks should be the center of focus for our drive to banish corruption.