Display all information about credit cost to borrowers by Banks: RBI

RBI directs via noti­fi­ca­tion No: RBI/2014–15/422 dat­ed 22^nd Jan­u­ary, 2015 Banks to dis­close fol­low­ing Information’s in their web­site as well as in a key statement/fact sheet to all indi­vid­ual bor­row­er from April 2015.

In order to fur­ther enhance trans­paren­cy in pric­ing of cred­it, based on the rec­om­men­da­tions of Work­ing Group on Pric­ing of Cred­it, banks are advised to adhere to the fol­low­ing addi­tion­al instructions:

(a) Web­site:

1. 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.
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.

• Banks should pub­lish 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.

(b) Key Statement/ Fact Sheet:

Banks should pro­vide a clear, con­cise, one page key fact statement/fact sheet, as per pre­scribed for­mat in Annex, to all indi­vid­ual bor­row­ers at every stage of the loan pro­cess­ing as well as in case of any change in any terms and con­di­tions. The same may also be includ­ed as a sum­ma­ry box to be dis­played in the cred­it agreement.

In order to give banks suf­fi­cient time to com­ply with the above instruc­tions, it has been decid­ed that the above addi­tion­al guide­lines will come into force with effect from April 1, 2015.

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