Nellore: Finance companies collect processing fee though loans are not sanctioned

Nellore: Some private finance companies in the city have been making huge bucks on loans by collecting processing fees from the people though they are denied loans. Police or officials ignore to take action against such finance companies.

Financial institutions like banks provide various loans to the people and charge reasonable processing fee from the applicants. Many scheduled banks are collecting one percent on housing and other loans as processing fees and accept the amount after sanctioning the loan.

In some banks, the processing charges will be added to the loan account after the loan is approved. Then, the customer pays through their savings bank account or some other means.

But, some private companies are displaying boards that they are providing various loans to the customers and accept applications along with other documents. They ask for processing fees ranging between Rs. 4,000-Rs 6,000 from the customer in advance.

They visit the premises of the applicant and majority times they deny the loan. But even then, they collect the processing fees through a demand draft or cheque giving a shock to the people. If the people ask why the company is collecting the processing charges though the loan was denied, representatives simply say that they follow the rule fixed by their head office.

"I approached a Finance Company in the city for a loan a week ago and they provided application and other details. Subsequently, they visited my house and business place and finally said my cibil score is inadequate for sanctioning loan. When I asked for returning my cheque issued for Rs. 4,150, they simply said they would be collected as processing charges," said Satish from Venkateswara Puram in the city.

In fact, these finance companies are witnessing huge crowds of people on a daily basis for loans and their main activity is said to be collecting processing charges rather than providing loans, hued another victim Ramana Reddy.

A senior police official said they will file cases on economic offenses only when people come forward to lodge complaints against such fraudulent companies.