4 serious issues why RBI has reprimanded banks
Recently, the Reserve Bank of India (RBI) had asked banks and NBFCs not to charge additional interest rates from their customers. The central bank said that there was s a need to be fair and transparent in the matter. It informed banks that there were many complaints against them, and such cases have come to light where more interest than the prescribed limit had been charged from borrowers. The Reserve Bank has asked the banks not to charge additional interest just like that. Know 4 such ways in which banks were charging you extra interest.
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1- Charging interest from the date of loan approval
Many banks were charging interest from borrowers on the loans given to them from the date of its approval. Banks should charge interest from the day the loan amount reaches people's accounts.
2- Charging interest from the date of issue of cheque
Something similar was seen in the case of giving loan through cheques. It was found that banks were charging interest from the date of issuing the cheque, whereas the cheques were handed over to customers after several days. Interest should be charged from the date of handing over of the cheque and not from the date of issuing.
3- Charging interest not for the outstanding days but for the entire month
In case of giving loan or repayment during a month, some banks were charging interest rate for the entire month. In such a case, what banks should do is that they should charge interest only for the remaining days of the month for which the loan is outstanding.
4- Collecting interest on the entire loan by taking some installments in advance
In some cases, it was also observed that banks were charging one or more installments upfront, but were calculating interest on the entire loan amount. Noticing these things, the RBI said that such non-standard practices of charging interest, which are not in keeping with the spirit of fairness and transparency while dealing with customers, are a cause for 'serious concern'.