Seylan Bank restrained from increasing interest

Sandasen MARASINGHE

Colombo Commercial High Court yesterday issued an enjoining order restraining Seylan Bank from increasing the interest rate on a loan taken by a customer.

Commercial High Court Judge Gamini Amarasekara issued the order after a customer filed a plaint alleging that the Moratuwa Branch of the Seylan Bank informed him that the interest rate of 28 percent on his bank overdraft of Rs 6 million would be increased to 38 percent.

Plaintiff W.M.M. Fernando submitted before Court that the Bank informed him of increasing the interest rate when he informed the Bank that he was not in a position to settle the loan. He had wanted to settle it with the money he had deposited in one of its sister companies, the Ceylinco Investment and Reality.

Plaintiff Fernando cited Seylan Bank PLC , Manager of the Moratuwa Branch of Seylan Bank and Ceylinco Investment and Reality Pvt Ltd as the defendants.

Plaintiff Fernando submitted that he invested Rs. 8 million in the Fixed Deposit of the Ceylinco Investment and Reality. And pledging the FD as a colateral he obtained an overdraft of Rs. 6 million from the Seylan Bank PLC.

Plaintiff further submitted that he had paid loan instalments upto March 01, 2009 and he had asked the Bank to recover the loan from the money in the FD as he was not in a position to pay the loan installments.

But the bank refused his request and instead informed him the interest rate of 28 percent on the OD would be increased to 38 percent.

The plaintiff prayed before the Court to issue orders restraining the Seylan bank from increasing the interest rate on the loan and also preventing it from giving this information to the Credit Information Bureau (CRIB).

The Court issued both enjoining orders.

The Court put off the case for November 8.