बिज़नेस
RBI mandates banks to disclose total personal loan cost in writing
The Reserve Bank of India has made it compulsory for banks to provide written details of the total cost of personal loans, aiming to curb hidden charges.
The Reserve Bank of India (RBI) has issued a new directive requiring banks to furnish borrowers with a written breakdown of the total cost of personal loans before disbursal. The move is intended to eliminate hidden charges and ensure greater transparency in lending practices.
Under the new guideline, banks must clearly itemise all fees, interest rates, processing charges and any other costs associated with a personal loan. This information must be provided to the customer in writing prior to the loan agreement being signed.
The RBI said the measure will protect consumers from unexpected expenses and promote fair competition among lenders. Banks that fail to comply with the directive may face regulatory action.
The directive applies to all scheduled commercial banks operating in India and is effective immediately, with banks expected to align their loan documentation processes accordingly.
Under the new guideline, banks must clearly itemise all fees, interest rates, processing charges and any other costs associated with a personal loan. This information must be provided to the customer in writing prior to the loan agreement being signed.
The RBI said the measure will protect consumers from unexpected expenses and promote fair competition among lenders. Banks that fail to comply with the directive may face regulatory action.
The directive applies to all scheduled commercial banks operating in India and is effective immediately, with banks expected to align their loan documentation processes accordingly.