The Allahabad High Court observed that it is the duty of the RBI to ensure that customers are not inconvenienced by the high rates of interest charged by the banks, and not remain a mute spectator.

In that context, the Bench of Justice Mahesh Chandra Tripathi and Justice Prashant Kumar observed that, "As per the guidelines given by the RBI, any change in that rate cannot be applied to the customers without notice to him and without his consent. The respondent bank had increased the floating rate of interest arbitrarily without any proof of notice to the complainant. It was not mutually acceptable to him and the consent was not taken as per the guidelines of the RBI referred above."

In furtherance of the same, it was also observed that, "Surprisingly, RBI had been issuing guidelines but has done nothing for the implementation of the same. They have just been a mute spectator allowing the banks to charge arbitrarily a very high rate of interest. Even if the benefit of doubt is given to the bank that they are free to charge the interest rate but it is duty of the RBI to see that the customers are not inconvenienced by huge rate of interest charged by the banks."

Senior Counsel Kalpana Singh appeared for the petitioner, while ASGI Gaurav Kumar Chand, along with others, appeared for the respondent.

In 2006, the petitioner borrowed 9 lakhs from Standard Chartered Bank at a variable interest rate of 12.5% per annum, with a repayment plan of 144 monthly instalments. Upon requesting a No Dues Certificate, the petitioner alleged that the bank had collected 27 lakhs instead of the sanctioned 9 lakhs.

The petitioner argued against the exorbitant charges, emphasizing the lack of justification for such high-interest rates. After filing complaints with the bank and the Banking Ombudsman, the petitioner received a "non-speaking order" on 17.6.2020 under Clause 11(3)(c) of the Scheme, 2006, which claimed resolution without allowing the petitioner to submit objections.

The Court observed that although it was clear that a variable rate of interest had been charged by the bank, but the same had not been accepted by the petitioner. It was also noted that the bank on its own had charged annual maintenance charges which were not agreed upon by the petitioner.

It was further observed that, "The Banking Ombudsman, who is supposed to look into the grievances of the customers, has miserably failed to adjudicate the matter...Even the impugned order of closure of petitioner’s complaint by the Banking Ombudsman is a non speaking order and only a formatted order, which has been passed mechanically, without application of mind."

Accordingly, the petition was allowed.

Cause Title: Manmeet Singh vs Union of India & Ors.

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