Bank decided to revise the loan interest

I got this from friend:

I received letter from Standard Chartered Bank saying..
" In line with current market practice, we are currently reviewing the interest rate on your personal loan. We write to inform you that in accordance with the Terms & Conditions governing your Personal Loan with the bank, the interest rate on your Personal Loan will be increased from __% to 10%. Such increase shall take effect as of 1st March 2009. There will be no change in your monthly installment however the remaining tenor of your loan will be extended by 3 months. All other terms and conditions of your loan shall remain unchanged."

Is it fair? Any comments or opinion on this issue?

Thank you very much.

Not a good practice. Hopes you find ways to resolve this issue.

Bloody unfair! but....

They're actually passing on the increased cost of their funding to their customers. Unfortunately, it is how the system works. You are just unlucky that the world is experiencing a credit crunch at the moment.

There's no such thing in Islamic financing albeit a little more expensive than conventional financing. But at least the bank absorbs the risk of the cost of financing going up (in the future). In other words, your personal loan costs (i.e. the bank's profit margin) is fixed throughout the agreed tenure.

The whole World is on downward trend but things are either holding up or on upward trend in Qatar. Example being hotel room rates in Doha are getting more expensive these days, apparently to make up for the low occupancy.

So, the economic theory does not work here.