RBI on Monday warned lenders to not levy interest from the date of loan sanction, instead of actual disbursement. In a home loan or other loans, there is often a lag between sanction and disbursement and charging it from the date of sanction imposes additional interest cost on the borrower.Charging interest from the date of loan sanction or loan agreement execution rather than from the date of actual disbursement is a violation of fair lending practices norms.Customers end up paying interest on money they haven’t received, which inflates the cost of borrowing. Second, in the case of loans disbursed by cheque, charging interest from the date of the cheque rather than when it’s cashed or…
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‘Can’t levy interest on loan amounts not received’: RBI to Banks
