With the gap between loan sanctions and disbursal on the rise, public sector banks are back to levying commitment charges. PSBs are now levying a commitment fee of up to 100 basis points of the sanctioned amount in case a company failed to avail the credit facility. The move is aimed at stopping companies for going shopping for the best bargain by using a sanction letter.
Commitment Charges are being levied to avoid asset-liability mismatch possibilities as banks raise deposits in line with the loans they have sanctioned and also on the future loan flow expectation.
Source: http://www.business-standard.com/india/news/commitment-chargesback-as-sanction-disbursement-gap-rises/380291/
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