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Customer Rights Upheld By RBI: Banks Must Rectify Interest Charges, Refund Overcharged Customers – Prime Time News24


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 costs to prospects.

The rules on Honest Practices Code issued to varied regulated entities (REs) since 2003, inter-alia, advocate equity and transparency in charging of curiosity by the lenders, whereas offering satisfactory freedom to them as regards mortgage pricing coverage.

“Throughout the course of the onsite examination of REs for the interval ended March 31, 2023, the Reserve Financial institution got here throughout cases of lenders resorting to sure unfair practices in charging of curiosity,” the RBI mentioned 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 costs and take corrective motion, together with system stage modifications, as could also be crucial, to handle,” the problems regarding charging of curiosity, the round mentioned.

Throughout onsite examinations of REs, the RBI mentioned 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 cases 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 compensation of loans in the course of the course of the month, some REs have been charging curiosity for all the month, fairly than just for the interval for which the mortgage was excellent, the RBI mentioned.

In some circumstances, it was noticed that REs have been gathering a number of instalments upfront however reckoning the total mortgage quantity for charging curiosity.

The RBI additional mentioned 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 significant 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 costs to prospects,” the round mentioned.

REs are additionally being inspired to make use of on-line account transfers in lieu of cheques being issued in a number of circumstances for mortgage disbursal, it added.

The round takes speedy impact, the central financial institution added.

(This story has not been edited by Prime Time News24 employees and is revealed from a syndicated information company feed – PTI)

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