“Issues relating to charging of interest,” the circular said.
During onsite inspection of RES, RBI said it has not charged any interest from the date of sanction of the loan or the date of execution of the loan agreement and the date of actual disbursement of funds to the customer.
There were also cases where interest was charged from the date of the cheque, even though the check was handed over to the customer several days later.
RBI said that in case of disbursement or repayment of loan during the month, some RES were charging interest not only for the period but for the entire month for which the loan was outstanding.
In some cases, it was observed that REs were depositing one or more installments in advance but calculating the entire loan amount to recover interest. RBI further said that unfair practices of charging interest and other such non-standard practices are not in line with it. A sense of fairness and transparency while dealing with customers.
"This is a matter of serious concern to the Reserve Bank. Wherever such practices have emerged, the RBI, through its supervisory teams, has advised RES to refund such excess interest and other charges to customers," the circular said. Has given." Has been given."
It added that REs are also being encouraged to use online account transfer in lieu of issuing checks in some cases for loan disbursement.
The central bank said, the circular will come into effect with immediate effect.
During onsite inspection of RES, RBI said it has not charged any interest from the date of sanction of the loan or the date of execution of the loan agreement and the date of actual disbursement of funds to the customer.
There were also cases where interest was charged from the date of the cheque, even though the check was handed over to the customer several days later.
RBI said that in case of disbursement or repayment of loan during the month, some RES were charging interest not only for the period but for the entire month for which the loan was outstanding.
In some cases, it was observed that REs were depositing one or more installments in advance but calculating the entire loan amount to recover interest. RBI further said that unfair practices of charging interest and other such non-standard practices are not in line with it. A sense of fairness and transparency while dealing with customers.
"This is a matter of serious concern to the Reserve Bank. Wherever such practices have emerged, the RBI, through its supervisory teams, has advised RES to refund such excess interest and other charges to customers," the circular said. Has given." Has been given."
It added that REs are also being encouraged to use online account transfer in lieu of issuing checks in some cases for loan disbursement.
The central bank said, the circular will come into effect with immediate effect.
