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Showing contexts for: prepayment charges in M/S Splash Bath Appliances Inc vs Sidbi Bank on 20 October, 2021Matching Fragments
7.3) Reference was also made to clause
(h) of paragraph no.5.3 which stipulates that in case of loans above Rs. 50 Lakh, prepayment charges would be levied in all cases of fixed rate loans and for floating rate loans including working capital limits, prepayment charges would be levied if the account is being taken over by some other bank/financial institutions/NBFCS. etc. Relying upon these two clauses, it was submitted that as respondent no.1- SIDBI has disclosed that prepayment charges would be levied upon the financial assistance advanced by respondent no.1- SIDBI being taken over by some other banks, it amounts to disclosure and compliance of RBI circulars dated 25th November, 2008 and 12th November, 2010 and as such, the petition is liable to be dismissed as there is full disclosure of the fact of levy of prepayment charges by respondent no.1 - SIDBI upon the petitioner in public domain and therefore, it is upon the petitioner to be aware about such charges being levied by respondent no.1 while availing the financial assistance.
7.7) It was therefore, submitted by the learned advocate for respondent no.1 - SIDBI that petitioner having paid prepayment charges and respondent no.1- SIDBI having disclosed the levy of prepayment charges on the website as well as reference being made in clause (7) of Letter of Intent, the petitioner cannot now make any grievance with regard to levy of prepayment charges by respondent no.1 bank and reliance placed on the circulars of the RBI are already complied with by respondent no.1- SIDBI and therefore, petition is liable to be dismissed.
(j) Ensure disbursal of loan sanctioned within two working days from the date of compliance with all terms and conditions governing such sanction.
k) Ensure periodic review and renewal of facility as per terms and conditions in the sanction letter given to you."
16. Except the above paragraph which contains reference to prepayment charges in clause (g) and clause (h) of paragraph no. 5.3, there is no other stipulation or disclosure in the entire document of Code of SIDBI's Commitment with regard to prepayment C/SCA/16433/2019 JUDGMENT DATED: 20/10/2021 charges to be paid by the borrower. In the facts of the case, clause (h) would be relevant as it provides that in case of loans above Rs. 50 lakhs, prepayment charges would be levied in all cases of fixed rate loans and for floating rate loans, including working capital limits, prepayment charges would be levied if the account is being taken over by some other bank/financial institutions. However, how much prepayment charges would be levied and what are the terms and conditions for levy of such repayment charges is nowhere disclosed in the Code of Commitment which is uploaded by SIDBI on the website. The contention of respondent no.1 bank that the above clause(h), is forming part of paragraph no. 5.3 of SIDBI's Commitment which is stated to have been uploaded on website and therefore, the petitioner is supposed to know such clause when the petitioner makes such application for loan is far-fetched to meet with disclosure as per the RBI circulars.
33. With regard to the contention raised on behalf of the respondent no.1- SIDBI that prepayment charges are levied in the course of banking activities or business of the respondent no.1- SIDBI as it is being levied in all other financial institutions and public sector banks, there cannot be any dispute or any quarrel with regard to power or authority to levy of prepayment charges by respondent no.1- SIDBI, but the same is required to be disclosed. Therefore, only issue which is arising in this petition is with regard to non disclosure of such charges being levied by respondent no.1 - SIDBI as per the guidelines issued by the RBI. Respondent no.1 - SIDBI is not precluded from levy of prepayment charges as it may be required to stop the borrower from shifting from one financial institution to another financial institution, creating unhealthy competition in the financial sector, resulting into loss to the financial institution. However, at the same time the banks and financial institutions are required to caution and inform the borrower with regard to levy of such prepayment charges. Merely mentioning in some clause in one of the paragraphs of the document uploaded on C/SCA/16433/2019 JUDGMENT DATED: 20/10/2021 website pertaining to the conduct of SIDBI's Commitment cannot be said to be full and transparent disclosure. Respondent no.1 - SIDBI is required to disclose levy of such prepayment charges specifically in Letter of Intent or sanction letter at the time of sanctioning of the loan, then only there would be a full and transparent disclosure as per the RBI circulars which would be binding upon respondent no.1- SIDBI.