Lets defend our fellow men from financial terrorism conducted by NBFCs

My name is Sampathrao Sudhakar. I have taken a loan of Rs. 12,00,000/- From Shriram City Union Finance ltd., Srikakulam Branch, of Andhra Pradesh. Due to their financial irregularities, I wanted to fore close my loan account by paying them their due amount. For the fore closure, I asked them the foreclosure statement of my loan account. Being afraid of the gross irregularities and fraudulent calculations they are habitually performing, they refrained to give me the requested foreclosure statement, but instead, orally asking me to pay so and so much of amount, which was exorbitant. In other words, they deliberately discourage the customers from fore closing the loan accounts by over stating the due amounts and not providing the hard copies of loan account statements, without which, obviously, no one can know how much to pay.
Taking advantage of the delay, they kept on increasing the balance amount on one hand and not allowing me to fore close my loan amount, on the other hand. Getting seriously frustrated with their illegalities, I have filed a complaint in RBI highlighting the violations of its guidelines to NBFCs the above company is conducting and defrauding the general public of hundreds of crores of rupees every year, for more than a decade. However, the RBI has not taken any action till date.
Below are few of the guidelines formulated by the RBI, to be strictly followed by the NBFCs in the country, of which shriram city union finance ltd., is no exception but always violates to enrich itself at the cost of exploiting the innocent public :
1. When the borrower approaches the NBFC, they are supposed to convey to him in writing, in vernacular language (which they never do), by stating in it what annualized rate of interest it is going to charge, time for disbursal (which they normally do not obey), etc and also furnish him a copy of the loan agreement well in advance (which they never follow), and obtain a receipt of acknowledgement from the borrower, not doing which is an unfair trade practice. (Guidelines on fair practices code-RBI/2011-12/470. DNBS.CC.PD.No. 266/03.10.01/2011-12. Dt. 26TH March,2012 ) Hence, prima facie, the agreement deems to be disqualified by law, as none of the above requirements are being fulfilled by the shriram city union finance limited..
2. The loan agreement should also contain in it all the terms and conditions of the loan, that the pricing of the loan involves only three components namely; the interest rate, the processing charge and the insurance premium and should also expressly mention that there will not be any penalty charged on the delayed payment. ( Guidelines on fair practices code-RBI/2011-12/470. DNBS.CC.PD.No. 266/03.10.01/2011-12. Dt. 26TH March,2012 ). As the account statement will have in it cheque bounce charges, penalties for late payments, cumulative term interest rate applied to the loan as against the annualized interest rate, ODs and other charges; all of which are violative of the RBI Guidelines and as per law, as the opposite parties charge interest rate up to 36% per annum, as against the 15.889% it is supposed to charge, according to the loan agreement. This is one of the reasons why they always refrain from furnishing, unless insisted , a copy of the loan agreement, by the court, for it to analyze the violations the opposite parties repeatedly conduct. Even if the loan is continued as per schedule, for a loan agreed to be paid at the rate of 15.889 % per annum, upon calculation, proves to be 27.27 % per annum, calculated at the EMIs they charge from the customer normally. That’s one of the reason they don’t furnish a copy of the loan settlement statement, to the borrowers.
3. Mechanism, issued by the nodal officer vide -RBI/2012-13/416. DNBS.CC.PD.No. 320/03.10.01/2012-13. Dt. 18TH february,2013; there has to be in place a proper grievance redressal mechanism, to address issues concerning their company. The non-compliance of the opposite parties’ to this regulatory norm is a strict proof of its unfair trade practices, that has put enormous burden on the financial and mental condition of the borrowers.
4. THE NATIONAL CONSUMER REDRESSAL FORUM, in Revision Petition No.1913 of 2004, from the order dated 06.05.2004 in A No.1706 of 2003 of the State Commission, Madhya Pradesh, HON'BLE MR. JUSTICE M.B. SHAH, In C.C. No. 51 of 2007;
The exerpts of the order are as follows :
“ It is apparent that there is no restriction with regard to charging of usurious rate of interest by the Banks or Non-banking financial institutions in their money lending activity. There is also challenge to various unjustified demands such as Processing Fee, etc.,”
“ Consumers who are in absolute need are having no bargaining capacity and are forced to pay interest which is unjustifiable, unreasonable and coercive. In the present case, interest at the rate of 36% per annum is sought to be recovered. There must be some control on such banking and financial institutions with regard to the rate of interest and to protect the consumers, some regulations are required to be framed. In a welfare state, the financial institutions cannot be permitted to take advantage of the financial weakness of the consumers and enrich themselves. If this is permitted, the whole purpose of the Consumer Protection Act would be frustrated.”
“A needy person can be exploited without any restriction. In our view, this is against the spirit and object of the Consumer Protection Act and may amount to unfair trade practice.”
“It appears that consumers are left at the mercy of exploiters. Considering the fact that there is apparent exploitation by the NBFCs and also by certain Banks by charging interest, which may be termed as shylockian interest or usury practice, the matter requires serious consideration as consumers in this country are required to be fully protected against such unfair trade practices as per the provisions of the Consumer Protection Act. “
“ On that day, the learned amicus curiae pointed out various circulars issued by the RBI while exercising powers under Section 45L of the Reserve Bank of India Act, providing that usurious rate of interest cannot be charged. She also produced on record the Policy Statement of RBI for the year 2007-08. “
“ From the various circulars issued by the RBI, it appears that the RBI repeatedly emphasized that usurious rates of interest cannot be charged by the banks but it appears that there is no control on this issue and the banks/non-banking financial institutions are exploiting the situation and the concerned officers of RBI appear to be unaware of the same.
“ We would add that under the Consumer Protection Act, charging of such rates of interest would amount to exploitation of the borrowers’ needs and to a large extent amount to unfair trade practice.”
Friends, it is therefore necessary to let all of you know that shriram city union finance limited is operating all over india with its 28,000 offices and 35,000 work force, is one of the most illegal company which feeds its un imaginable growth by plundering innocent and needy people. Being literate, it is our responsibility towards our fellow men of the nation to educate them and help them defend themselves from being plundered by such unscrupulous and fraudulent NBFC.
Therefore, please share your opinions on this message I have posted so that we can have a collective advantage to persuade the governments and policy makers to act upon such exploitation of the needy, and recover the already ill-acquired money to a tune of thousands of crores for the past few decades, and use it for the collective welfare of the poor people of the nation.