RBI spells out new norms to enhance transparency in pricing of credit
The RBI has sought to protect bank borrowers by directing banks to observe the following additional instructions. In terms of RBI notification the new guidelines comes into force from APRIL 1, 2015. This is in order to give banks sufficient times to comply with its instructions.
(a) In Bank’s Website:
(b) Key Statement/ Fact Sheet:
According to new norms banks should provide a clear, concise, one page key fact statement or fact sheet to all individual borrowers at every stage of loan processing. This rule applies in case any changes in terms and conditions of sanction. Banks may include the same as summary box to be displayed in the credit agreement.
The prescribed format of RBI for key statement contains the following details for each specific loan product of the bank.
4(a) in case of floating rate loans i.e. ……..%Base rate +…………..
4 (b) in case of fixed rate loans……………%,
(a)Fee payable on application (required to specify all type of fee to be charged),(b)during the term of the loan required to specify all type of fee to be charged),(c)on foreclosure( required to specify all type of fee to be charged),(d) Fee refundable if loan not sanctioned/disbursed.(e)Conversion charges for switching from floating to fixed interest and vice-versa, (f) penalty for delayed payment.
THE FONT SIZE OF KEY FACT SHEET SHOULD BE MINIMUM Arial-12
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