Banks can’t change home loan interest rates without taking borrowers’ consent

Usually, banks offer either of the following loan options –Floating Rate Home Loans which is a market variable loan and Fixed Rate Home Loans which is set for a certain tenure.

New Delhi: The Delhi consumer commission has ruled that banks cannot change home loan interest rates without taking the consent of borrowers. It also called the automatic change in interest rates an "unfair trade practice". Justice Sangita Dhingra of the commission noted that banks were obliged to inform borrowers and seek their consent whenever home loan interest rates were being changed under the floating rate of interest plan. Recalling a 2015 judgment of the Supreme Court, as well as a 2019 judgment of the national consumer forum, the commission did not dispute that in cases of floating rate of interest, the interest on loan kept fluctuating as per the approval of the Reserve Bank of India (RBI). Also, by inking a loan agreement a borrower would agree to these interest alterations as well as changes in the tenure of the loan repayment. However, the commission maintained that an opportunity must be afforded to the borrower before changing the floating rate of interest. Usually, banks offer either of the following loan options –Floating Rate Home Loans and Fixed Rate Home Loans.