HYDERABAD: A Division Bench of the Telangana High Court has held that banks cannot seek more than the contractual rate of interest on home loans. The Bench comprising Justice V Ramasubramanian and Justice P Keshava Rao was looking into a writ petition filed by K Sri Ranga Prasad and his wife challenging the order of the Debt Recovery Tribunal asking them to pay an interest of 18 per cent per annum along with the outstanding amount.
The Bench made it clear that the petitioners shall be obliged to pay interest only at 11.5 per cent per annum as is mentioned in the contract. “Housing loan is pitched at a much lower rate of interest than commercial loans. Therefore, banks cannot seek more than the contractual rate,” the court said.