J&K Bank deducts charges on unutilized amount of loan, traders, hoteliers aghast
Srinagar: Jan 04 : The traders and hoteliers here have expressed resentment against the Jammu & Kashmir Bank for allegedly deducting charges on unutilized loan amount of the borrowers, terming it as unacceptable. However, the bank said the consumers should visit the concerned branches to ascertain the reasons as there has been no deduction of charges on unutilized loan amount by the bank.
Talking to the news agency Kashmir News Observer (KNO), Jammu Kashmir Hoteliers Club (JKHC) Chairman, Mushtaq Ahmad Chaya, said that he has received some complaints from some of the hoteliers that interests are being deducted on the unutilized amount of loan from their CC accounts.
“It is totally wrong that despite the amount remaining unutilized, the interest is levied on the consumers. It is a sort of a facility and the interest can be charged only when the amount is being utilized,” he said.
“Although I don’t personally know anything in this regard, I have received complaints from some of the hoteliers. This should not happen and I don’t think other banks are doing so,” he said.
Moreover, the trade bodies have also issued statements in this regard, appealing CMD J&K Bank Baldev Prakash to personally intervene into the matter as this has created an immense displeasure amongst the borrowers.
Kashmir Economic Alliance (KEA) chairman Mohammad Yaseen Khan in a statement said, “on one hand it was encouraging that in the last few quarters the bank has shown growth when other such financial institutions have been witnessing a fall in their assets across the south Asian region. While we appreciate our bank, in contrast J&K Bank is deducting charges on one pretext or other which we fail to understand. We are not asking for any relief, soft loans or concessions but deducting unnecessary charges is very depressing and unacceptable,” Khan said.
“Now that the Bank is in a stable position, it needs to play its role for providing solutions for revival of the economy of the UT which has always been deeply connected to and supported by the stakeholders like business community hence becomes imperative upon J&K Bank to stop debiting charges of this nature otherwise we will be forced to look for other lending options from other financial institutions of the country,” Khan observed.
A few days ago, Kashmir Trade Alliance (KTA) also expressed resentment over levying of commitment charges.
In a statement, President of KTA, Aijaz Shahdhar, stated that this was the first time in the history of J&K Bank that borrowers were being forced to pay for loans or the percentage of loans that they actually didn’t take out or use. “The bank has refrained from charging these fees perhaps in recognition of the hostile work environment earlier.”
“The commitment charges have been deducted without prior intimation to the account holders as no such charges were deducted previously till the June quarter. If such charges were to be implemented by the bank, a proper intimation either by mail, sms, or print media was to be sent to all the account holders,” reads the statement.
According to the RBI’s instructions, the financing banks were not required to levy commitment fees; rather, this was a voluntary decision that depended on the banks’ judgment, KTA stated.