A loan dispute is a common issue between a customer and a bank. All loans, whether personal or otherwise involve many technicalities that result in misunderstanding and dispute. The foremost basic thing, whenever a dispute arises, is to seek out the loan agreement and be aware of what the dispute is and why it occurred, and what corrective measures one wishes to take. The banks’ website usually provides information regarding the dispute resolution process.
Step 1: Keep records of conversation with the bank
Once the outline is drawn about the issue(s), an individual can contact the bank about it. There are multiple ways to initiate contact with the bank. Banks usually have a separate retail division to help customers with loan settlements. One can even call the number provided on the website or agreement or write to their office address or email them.
These records are for future references. Emails are easier to keep a copy of but that is not the case with phone calls. It is important to take note of the executive one will be talking to and correctly note the complaint number generated after logging the complaint. In case the dispute is communicated in writing, banks make certain to send an acknowledgment of the same.
Step 2: The Dispute Resolution Procedure
By law, each bank must provide the email address, the mailing address, and the customer care number to be contacted in case of a dispute. These are usually provided on the bank’s website. Supported by the recommendations of the Damodaran Committee, the Indian Bank Association, and also the Ministry of Finance, each bank enables customers to register their complaints online through the website. It also states when to expect a reply and provides the hierarchy of the redressal mechanism. In most cases, the banks attempt to resolve the issue within 30 days of receiving the complaint but it can also take longer. One must ensure the bank provides the reasons for taking beyond the regular time.
The fastest and the most efficient way to get the case sorted is to check if the grievance can be addressed at the branch level. Locating the person who sold the loan (though difficult) may help sort the issue quickly.
Step 3: Timing the benefits of escalating
One can always escalate the resolution to the following level if he/she is dissatisfied with the one provided by the bank. The Chief Customer Services Manager or the Chief Grievance Officer usually comes into play at around this point. If one continues to be dissatisfied, he/she can approach the internal Ombudsman, who is usually a retired general manager of any Public sector bank other than the bank in question. Each bank mentions the individuals under the internal ombudsman scheme on the website, generally with contact details. Though most complaints belong to the stated terms and conditions’ being different from what was promised, they also register complaints regarding delay in the crediting proceeds of the loan installments, standing instructions, collateral securities, and security documents after satisfactory adjustment to the loan outstanding.
Step 4: Getting external help
There are usually three external ways to assist with dispute resolution. The primary is the Banking Ombudsman, who is an external party and not a part of the bank in question. An individual must approach the officer within one year of the bank rejecting the issue. The names of the nodal officers are again on the Bank’s website.
The second is approaching the Lok Adalat. It functions as a court and believes in the process of negotiation, mediation, and conciliation. It’s also cost-effective. However, one must note that the order passed by the Lok Adalat is final and there can be no further appeals against the order of Lok Adalat.
The third way to resolve loan disputes is through Consumer Courts. It ensures protection under Consumer Protection Act and is preferred because it allows various levels of appeal. Though one can approach the Consumer Courts within two years of the dispute arising. It is an awfully long process.
Step 5: Do not default
One must remember that the rise of a dispute doesn’t terminate the pre-existing obligations. One must never default in the monthly payment of installments or EMIs. This may go against the customer by harming credit ratings.
Step 6: Keep a cool head
No problem is permanent and in the process of solving it, it’s important to be patient and calm. Anger driven in the wrong direction would not solve the issue and in some cases even prolong it. The vital part is to resolve the issue as quickly and amicable as possible.