The central banker wants to ensure transparency and empower the customer
Shishir Tripathi | January 23, 2015
The Reserve Bank of India is pushing for greater transparency in financial world and has asked all banks to display charges and loan interest rates on their respective websites to facilitate informed decisions being taken by the customer.
"Banks should display on their website the interest rate range of contracted loans for the past quarter for different categories of advances granted to individual borrowers along with mean interest rates for such loans," the RBI has said.
The RBI has also insisted that banks should also mention on websites the total fees and charges applicable on various types of loans to individual borrowers. This should facilitate borrowers taking informed decision to buy bank loans
In its “Master Circular on Customer Service in Banks” issued July last, to all commercial banks, the RBI had instructed the banks to display vital information related to key aspects such as service charges, interest rates, services offered, product information, time norms for various banking transactions and grievance redressal mechanism at their bank branches.
The apex bank observed that during the course of inspection to bank branches by RBI, it was observed that many banks were not displaying the required information “due to space constraints, lack of standardization of the instructions.”
The instructions were clearly intended at “promoting transparency” in the interest of the customers. However in less than a year after the detailed circular instructed the banks to fall in line, RBI has moved a step ahead in ensuring the transparency by instructing the banks to display loan interest rates on their websites.
Following information has to be displayed by the banks on their websites now as mandated by RBI
1. Interest rate range of contracted loans for the past quarter for different categories of advances granted to individual borrowers along with mean interest rates for such loans.
2. The total fees and charges applicable on various types of loans to individual borrower should be disclosed at the time of processing of loan as well as displayed on the website of banks for transparency and comparability and to facilitate informed decision making by customers.
3. Annual Percentage Rate (APR) or such similar other arrangement of representing the total cost of credit on a loan to an individual borrower on their websites so as to allow customers to compare the costs associated with borrowing across products and/ or lenders.
Further the banks were also directed to provide a “clear, concise, one page key fact statement/fact sheet” to all individual borrowers at every stage of the loan processing as well as in case of any change in any terms and conditions. Banks have to follow the new guidelines from April 1.
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