Commitment fees

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

11 November 2014 The loan account of an entity has been transferred from one Bank to another Bank.

The New Bank after transfer of loan account deducted a huge sum of money as Commitment Charge on the ground that the borrower did not utilise the threshold limit of 75% of the Cash Credit Limit and accordingly it is liable for payment of 0.50% of entire unutilised portion as the same is below 50%.

Is this legal or violative any specific provision of law or RBI Circulars in this respect.
Kindly advise.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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11 November 2014 The banks are allowed to charge for under utilization of limits. Check the loan documentation you signed with thr new bank..

Querist : Anonymous

Querist : Anonymous (Querist)

11 November 2014 There is no specific clause on it.
Can you throw any light as to what the Law or RBI Circulars, if any, is saying on this?
I am planning to challenge this Commitment Charge and looking for a valid provision of law in support of this.

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