Consumer Forum Recommends RBI Conduct Forensic Audit of Fullerton Credit For Charging 47% Interest p.a, compounded monthly
The State Commission for Consumer Redressal, Chandigarh, has suggested that RBI conduct a forensic audit of Fullerton Credit Company, a non-banking finance company (NBFC), providing finance to households and small and medium enterprises. This extraordinary suggestion was made following the remarkable case of Jasmer Singh, 54, Mohali, Chandigarh, who was stuck with a loan of Rs62,392 taken on 14th October 2011 from Fullerton India Credit at an extortionate rate of 47% per annum compounded monthly.
In a measure to provide relief, the forum has ordered Fullerton Company to repay Rs3000 and Rs3500 charged towards Fullerton India Privilege Program Membership Fee and Sampoorna Suraksha Premium and interest charged at 47%. Further, it has also ordered Fullerton to issue ‘No due Certification’ and provide Rs70,000 as compensation and Rs22,000 as litigation cost. Fullterton was also asked to deposit Rs2 lakh at Postgraduate Institute of Medical Education and Research(PGIMER), Chandigarh in the Poor Patient Welfare Fund (PPWF) and to deposit Rs 2 lakh in the “Consumer Legal Aid Account”.
Initially, Singh had approached the district consumer forum on 13th Feb 2018 to complain that while he had taken a loan of Rs62,392 from Fullerton Credit and had repaid, the company continued to withdraw amounts from his account. Singh approached the company to issue ‘No Objection’ certificate to refund the excess amount deducted. Fullerton refused. On not receiving any relief from the district forum, moved to the state forum.
He apprised the state forum that the district forum did not act on his complaint despite presenting all the relevant documents and loan agreement. The documents submitted by him supported his argument, as they revealed Singh repaying a total amount of Rs128,520 for a loan of Rs62,392, almost double that of the principal.
The company is still claiming Rs22,143.29 to be outstanding amount.
Fullerton argued that out of 48 EMIss, only 40 were paid by Singh and eight amounting to Rs27,704 were still pending.
The state forum decided that the interest charged by Fullerton Company was too high and Singh, as a result of this, is in poor financial condition.
The forum has sought RBI’s aid to curb such practices of looting retail loan seekers by charging exorbitant interest rates. As NBFCs fall within the purview of RBI’s supervision, it is high time that it steps in to ensure that companies like Fullerton are penalised for charging sky-high interest rates.
A Fullerton spokesperson said "Ever since it was brought to our notice we have been working closely with the customer to address his concern and resolve it at the earliest."