Knowing this rule will help you save on interest cost
In cases of disbursing loans by cheque, it was seen that interest was charged from the date of the cheque issuance, even though the cheque was handed over to the customer several days later
Kartik (name changed) had applied for a home loan at the bank. Since he had a salary account with the same bank, his relationship manager readily agreed to approve his loan of Rs 40 lakh. But there was a condition-in order for the manager to meet his monthly target, Kartik’s loan approval must be predated, or shown as approved a month earlier. Since Kartik was getting the loan easily, he did not ask too many questions. But this is where he made a grave mistake. Due to this, he ended up paying more in interest. Let’s understand how much loss you incur due to banks charging interest in this manner, and what instructions has the RBI has given to banks regarding this?
In the recent past, many such cases have come to light where banks have been charging interest to customers from the date of loan sanction or approval, instead of loan disbursement. In cases of disbursing loans by cheque, it was seen that interest was charged from the date of the cheque issuance, even though the cheque was handed over to the customer several days later. This meant that while the loan amount was credited to the customer’s account later, the interest calculation started way earlier.
The RBI, terming this action of banks as an unfair trade practice, has given strict instructions to regulated entities, i.e banks, NBFCs, and housing finance companies to not charge interest from the date of loan sanction, and instead, start charging interest from the date of loan disbursement. RBI has also advised returning the additional interest to customers
To avoid such difficulties, understand the rules and conditions related to the loan thoroughly before taking a loan.Ensure that the bank is charging interest only from the date of loan disbursement, and not from loan approval. Regularly check the EMI statement so that if there are any extra charges levied, they can be identified and corrected.
If you have any doubts regarding the loan or interest, contact your bank first. You can file a complaint with the bank’s Grievance Cell. As per the rules, it is the bank’s responsibility to resolve your complaint within 30 days. If this does not happen, you can approach the RBI’s Integrated Ombudsman. Do not be negligent in the pursuit of getting a loan easily and quickly. Remain alert, and if there is any problem, complain immediately.