The Reserve Bank of India has asked banks to disclose all charges involved in processing and sanction of loan applications in a transparent manner.
“Banks must disclose ‘all in cost' inclusive of all such charges involved in processing/sanction of loan application in a transparent manner to enable the customer to compare the rates/charges with other sources of finance,” the RBI said in a notification.
The information should also be displayed in the Web site of the banks for all categories of loan products, the central bank said.
The RBI has asked banks to disclose information such as fees payable for processing the loan application, the amount of fees refundable if loan amount is not sanctioned or disbursed, pre-payment options and charges and penalty for delayed repayments. In addition, banks have been asked to disclose the conversion charges for switching loan from fixed to floating rates or vice versa, existence of any interest reset clause and any other matter which affects the interest of the borrower. The RBI has asked banks to ensure that all such charges and fees are non-discriminatory.
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