Customers will directly benefit from this step of RBI and arbitrary and wrongful interest collection by banks will be curbed.
RBI has asked the banks and financial institutions to corrective action and to refund excess charges to customers. The direction comes after some banks resorted to unfair practices in charging interest. You will directly benefit from this step of RBI and arbitrary and wrongful interest collection by banks will be curbed. What irregularities in banks have been detected by RBI?
Banks start charging interest from the date of loan sanction, whereas interest should be charged to you from the day of loan disbursement. Similarly, if you had deposited the outstanding amount of the loan before time. Even then, banks used to charge you interest for the entire month. Whereas, the interest should have been charged till the day you deposited the money.
There may be some bank customers who paid one advance instalment of the loan. But interest was recovered from the entire amount of the loan including the advance instalment. You might not have noticed that banks charged you interest from the date of preparation of interest cheque, whereas the bank might have given you the loan check after many days.
- RBI has considered this behaviour of banks with their customers as unfair and against the rules. RBI asked banks to do following things:
- Refund the extra interest collected from customers in any way. If the bank has wrongly collected interest from you, then it will have to be returned.
- RBI has asked banks and financial institutions to review unfair methods of charging interest.
- RBI has also asked banks to take necessary steps for transparency in charging interest.
- It is said that instead of a bank cheque, transfer the loan amount to the online account.
All the rules issued by RBI have come into effect with immediate effect from 29th April. RBI felt the need to take such steps because, in the recent past, such cases have come to light when some fintech companies and loan apps have been threatening customers and sending agents to collect interest. Under the pressure of loan and huge interest, some people took steps like suicide, which is a matter of serious concern.
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