Banks must stop introducing new lending rate when RBI cuts rates. Its cheating customers
This petition had 28 supporters
Whenever the Reserve Bank of India increases lending rate, the same is reflected in our floating rate loans. But, when the rates are reduced, the Banks - even SBI - introduces new rate code, thereby customers are forced to pay some switchover charges.
For example if your floating rate is: PLR +1 and at time of sanction PLR was 8% your interest on loan will be 8+1 = 9. If the lending rate is increaed by 1% then it will be increased to 9+1 = 10%.
If the lending rate is reduced by 1% ideally you should pay 7+1 = 8. But, Bank introduces PLR1 and attaches this new rate. Thereby, your rate will be 9% and only option is to switchover to new rate PLR1 by paying some charges (normally 0.5% of the limit).
This is loot on customers and defeats the purpose of floating rate apart from increasing the financial burden on customers.
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