RBI has re-emphasised on truthful lending practices by lenders. (Consultant picture)
The central financial institution has additionally highlighted sure unfair practices being adopted by sure lenders.
Involved over some banks and lenders resorting to unfair practices in charging of curiosity, the Reserve Financial institution of India (RBI) on Monday directed them to take corrective motion and refund extra expenses to prospects.
The rules on Honest Practices Code issued to numerous regulated entities (REs) since 2003, inter-alia, advocate equity and transparency in charging of curiosity by the lenders, whereas offering ample freedom to them as regards mortgage pricing coverage.
“In the course of the course of the onsite examination of REs for the interval ended March 31, 2023, the Reserve Financial institution got here throughout situations of lenders resorting to sure unfair practices in charging of curiosity,” the RBI stated in a round.
The central financial institution has additionally highlighted sure unfair practices being adopted by sure lenders.
“…within the curiosity of equity and transparency, all REs are directed to evaluate their practices relating to mode of disbursal of loans, software of curiosity and different expenses and take corrective motion, together with system stage modifications, as could also be needed, to handle,” the problems regarding charging of curiosity, the round stated.
Throughout onsite examinations of REs, the RBI stated it noticed charging of curiosity from the date of sanction of mortgage or date of execution of mortgage settlement and never from the date of precise disbursement of funds to the shopper.
It additionally got here throughout situations the place curiosity was charged from the date of the cheque whereas it was handed over to the shopper a number of days later.
Within the case of disbursal or reimbursement of loans in the course of the course of the month, some REs have been charging curiosity for the whole month, reasonably than just for the interval for which the mortgage was excellent, the RBI stated.
In some instances, it was noticed that REs have been accumulating a number of instalments prematurely however reckoning the total mortgage quantity for charging curiosity.
The RBI additional stated unfair practices and different such non-standard practices of charging curiosity don’t align with the spirit of equity and transparency whereas coping with prospects.
“These are issues of great concern to the Reserve Financial institution. Wherever such practices have come to mild, RBI by means of its supervisory groups has suggested REs to refund such extra curiosity and different expenses to prospects,” the round stated.
REs are additionally being inspired to make use of on-line account transfers in lieu of cheques being issued in a couple of instances for mortgage disbursal, it added.
The round takes speedy impact, the central financial institution added.
(This story has not been edited by News18 workers and is revealed from a syndicated information company feed – PTI)
