The Reserve Bank of India (RBI) has issued guidelines on fair practices code for lenders, effective immediately, excluding payment banks. The move aims to ensure fairness and transparency in interest charging practices. Instances of unfair practices, including charging interest from loan sanction rather than disbursement, charging for the entire month despite partial repayment, and collecting advanced instalments while charging interest on the full amount, were noted. These practices are deemed inconsistent with customer fairness. The RBI urges lenders to adopt online transfers over cheques and directs them to review and amend their loan disbursal and interest charging practices for fairness and transparency.
RBI Introduces Fair Practices Code for Lenders on Interest Charging
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