Chennai: Private bank fined Rs 20 lakh for excess foreclosure fee

CHENNAI: A Tamil Nadu businessman who took on Kotak Mahindra Bank Limited legally for overcharging on his loan foreclosure over 15 years ago finally received justice as the Chief Metropolitan Magistrate, Egmore, found the bank guilty of criminal breach of trust and slapped Rs 20 lakh penalty on it. The charges against the bank’s then executives, who were also booked by the bank fraud wing of the Chennai Police, were dismissed.

In July 2006, R Selvaraj, who was into transport business, had availed a loan of Rs 1.5 crore from the bank's Saral auto loans division of the Chennai branch. After paying the monthly dues for a few months, he decided to settle the loan in full in the next year. The bank informed him he would be required to pay Rs 1.7 crore as final settlement.

Later, when Selvaraj requested the statement of accounts of his loan account for income tax filing purposes, an incomplete statement was furnished by the bank. He again wrote to the bank demanding the break-up details of the settlement of the sum of Rs 1.7 crore paid by him and also sought to refund the excess amount paid by him.

After the businessman approached the courts, bank officials met him, and in 2012, Rs 14.3 lakh was credited to his bank account. When the bank failed to reply to his letter asking on what basis the amount was credited, the businessman filed a police complaint.

In 2018, the bank fraud wing of the Chennai Police booked the bank and six executives of the bank under various sections, including criminal breach of trust and falsification of accounts.

On April 9, N Kothandaraj, Chief Metropolitan Magistrate, Egmore, held the bank guilty of the charges and imposed a penalty of Rs 20 lakh, of which Rs 10 lakh is to be paid to the complainant as compensation.