Filing a petition before the Supreme Court, the State-owned State Bank of India(SBI) has challenged the order of the National Consumer Disputes Redressal Commission(NCDRC), which held that levy of pre-payment fees from the customers on a loan was illegal if paid before the scheduled date.

After the preliminary arguments, a bench headed by Justice B N Agarwal directed Dr Usha Vaid, a loanee of the bank, to file her reply in four weeks. Dr Vaid had challenged the decision of the Bank  before the District Consumer Forum.

The petition which had been decided by the NCDRC after passing through  the district forum and the state forum, held that the banks could not charge any pre-payment fee from the customers. The court was hearing an appeal  by SBI against the NCDRC’s order that held such levies as an “unfair and restrictive trade practice.”

Normal practice

Additional Solicitor General Mohan Parasaran and Advocate Sanjiv Kapur, appearing for the bank, said that charging pre-payment fee was a normal banking practice and it was not for the consumer fora to alter the contracts between the parties.

The commission had also said that consumers’ right to avail loans at a lesser rate of interest cannot be curtailed by such pre-payment clauses.