In a recent notification, the Reserve Bank of India (RBI) has noted that
It is understood that some banks are furnishing a copy of the loan agreement only on request made by the borrowers. In this connection, we advise that not furnishing a copy of the loan agreement or enclosures quoted in the loan agreement is an unfair practice and this could lead to disputes between the bank and the borrower with regard to the terms and conditions on which the loan is granted.
The RBI has therefore directed all Scheduled Commercial Banks and Financial Institutions to
…invariably furnish a copy of the loan agreement along with a copy each of all enclosures quoted in the loan agreement to all the borrowers at the time of sanction / disbursement of loans.
While the RBI does a decent job of posting such notifications on its website, it’s certainly not the most effective way to reach the intended recipients - the people who take the loans. After all, how many among you take time off every week to read up on the RBI’s website?
Maybe it’s time the RBI started a consumer-education initiative; a weekly front-page column in a few leading newspapers should be a good start. What do you think?
Previous issues of Know Your Rights:
Further reading:
- Know Your Rights: From May 01, 2007 Your Bank Should Compulsorily Tell You Why Your Loan Application Was Rejected
- Know Your Rights: Did You Know That Banks Are Liable to Pay a Penalty for Issuing Unsolicited Credit Cards?
- How to Calculate the Loan Amortization Schedule (EMI, Principal, and Interest Components) for Your Car Loan?
- How to Calculate the Loan Amortization Schedule (EMI, Principal, and Interest Components) for Your Personal Loan?
- Problem: What Are The Steps To Be Followed After Closing My Personal Loan?
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