Legal Question in Banking Law in India

Re: Mortgage Of Property

consult a local lawyer or go thru SCC digest

Re: Mortgage Of Property

The interest may be levied as per agreement between the parties.

Re: Mortgage Of Property

Usually the agreemnents executed / sanction in respect of the loan contains clauses regarding the same specifying the rate at which the same is to be paid. Since the same is a matter of contract, the Bank would be justified in requiring payment of the same. To my knowledge there is no judgment which says that levy of pre-closure charges are illegal. However if the agreement / terms of sanction of the loan does not have any such a clause then the Bank may not be justified in levying the same.

Re: Mortgage Of Property

As far as my study of SC judgments up to date to the extent available to me there is no judgment declaring illegal the levy of interest at a higher rate on account of closure of loan before the period stipulated for repayment. In English law, the same is known as commitment charges, as Banks have committed funds taking into account the span of the loans lent by it and have not been considered illegal. If the agreement provides for such levy one cannot escape it unless the rate is so extortionate in which case you can complain to Banking Ombudsman and Reserve Bank of India.