BoB system error inflates EMIs
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KOLKATA: A system error at Bank of Baroda may have led some of its home-loan customers to stump up more than what they were due to pay in scheduled monthly repayments in March, multiple people aware of the problem told ET. The public sector bank, its spokesperson said, has taken remedial steps.The bank, said multiple people ET spoke with, charged a higher interest rate by mistake, leading to the deduction of an amount exceeding the scheduled equated monthly instalment (EMI). Alternatively, the bank charged less interest in some cases than it ought to have, its spokesperson said.Several borrowers were also allegedly marked delinquent when there was insufficient balance in their accounts against the higher liabilities, causing panic. To add to their woes, private recovery agents have started chasing them as overdue amounts automatically trigger an alarm. These borrowers have also seen their credit score drop, raising their distress level.A bank spokesperson said that corrective measures have already been taken.Also Read: If you want to have good governance, you cannot be in a yes-sir mode: Sashidhar Jagdishan"Following a regular review, it was identified that in a limited set of accounts, an incorrect interest rate was applied. In accounts where excess amounts were debited, refunds have already been processed, while in cases where customers were charged less interest, the difference has been recovered," the spokesperson said, responding to ET's queries on the matter.The bank maintained that these adjustments have been carried out in line with the applicable loan terms as agreed by the customer."Such periodic reviews are a standard process to ensure accuracy and fairness in customer accounts. The bank remains committed to maintaining the highest standards of customer service," the spokesperson added.Home loans contribute half of BoB's retail loans and about 11% of gross loan portfolio, which stood at Rs 13.45 lakh crore at the end of December last year. The home loan portfolio stood at Rs 1.44 lakh crore, growing 16% year-on-year. Retail loan portfolio was at Rs 2.86 lakh crore.Also Read: Kotak Bank set to acquire Deutsche's retail business in Rs 4,500-crore dealThe affected borrowers alleged that the deduction of a higher amount from savings accounts happened without their knowledge. Where the savings balance didn't cover the higher demand, borrowers were told to pay more when they reached out to the lender, said a couple of affected borrowers ET spoke with."I had to pay a Rs 57,290 more over my EMI of Rs 98,953. I was told that if I don't pay the additional amount, the account will show overdue and it would be reported to the credit bureau," said a Pune-based BoB customer, Nishi Mrinal."The bank had created an additional demand of Rs 57,290. I had Rs 3,998 in my savings account which was deducted automatically without my knowledge and the balance Rs 53,292 was marked overdue and reported to the credit bureau. I later paid the overdue amount so that the credit score remains good," she said.ET reviewed her correspondence with the bank on this matter.