The Kerala Lok Ayukta has directed the Kerala State Financial Enterprises (KSFE) to refund the excess amount collected as penal interest on a loan availed by a chitty subscriber from the Nedumangad branch.

In an order based on a complaint filed by T.Devapalan Nair, Upa Lok Ayukta K.K.Denesan directed the Managing Director, KSFE, to refund the amount to the petitioner within two months.

Mr.Nair had moved the Lok Ayukta alleging that KSFE had charged penal interest of 1.5 per cent on a passbook loan of Rs.16,500, for default of instalment payment on a chitty against which the loan was availed. Pointing out that the monthly interest on the loan had been paid regularly, he said the penal interest was unjustified and illegal.

The petitioner also alleged that KSFE had erred in levying service tax for chitty transactions from subscribers and in collecting money towards miscellaneous expenses to cover documentation and postage charges.

KSFE contended that it had the right to demand and realise penal interest on the loan availed by the chitty subscriber. Rejecting the argument, the Lok Ayukta termed the levy of penal interest as unjust, unreasonable and oppressive. It ordered KSFE to refund the excess amount to the complainant.

On the issue of service tax collected from the subscriber, the Lok Ayukta said the parties to the complaint would be bound by the verdict of the High Court on a writ petition pending disposal.

Accepting the petitioner’s submission on miscellaneous expenses, the Lok Ayukta said KSFE was not entitled to collect even a single paise from the customer in excess of the actual expenses incurred for rendering legitimate services.

“It is the duty of the respondent to inform the complainant of the details of the amount collected towards miscellaneous expenses and, if any amount has been collected in excess of the actual expenditure, it shall be refunded to him”. The order also directed KSFE to keep proper accounts for miscellaneous expenses and maintain transparency in financial dealings.