RBI Mandates Full Fee Disclosure for Co-op Banks

RBI/2008-09/328 RPCD.CO.RF.BC.No.78/07.38.01/2008-09 December 19, 2008 All State Co-operative Banks (StCBs) and Central Co-operative Banks (DCCBs) Dear Sir, Disclosing all information relating to processing fees / charges Please refer to paragraph 4 of our circular  RPCD.CO.RF.BC.No.93/ 07.38.01/2006-07 dated May 16, 2007  regarding complaints about excessive interest charged by banks, wherein State and Central Co-operative Banks were advised to lay down appropriate internal principles and procedures so that usurious interest, including processing and other charges, are not levied by them on loans and advances. 2. It has come to our notice that some banks levy in addition to a processing fee, certain charges which are not initially disclosed to the borrower. It may be mentioned that levying such charges subsequently without disclosing the same to the borrower is an unfair practice. 3. State and Central co-operative banks are, therefore, advised to ensure that loan application forms, in respect of all categories of loans irrespective of the amount of loan sought by the borrower, are comprehensive and all information relating to fees/charges, if any, payable for processing, the amount of such fees refundable in the case of non-acceptance of application, pre-payment options and any other matter which affects the interest of the borrower, are invariably disclosed in the loan application forms. Further, the banks must inform 'all-in-cost' to the customer to enable him to compare the rates charged with other sources of finance. 4. Besides, in case of all categories of loans irrespective of any threshold limits, the banks should also convey in writing, within stipulated time, the main reasons which, in the opinion of the bank, have led to rejection of the loan applications. Yours faithfully, ( G. Srinivasan ) Chief General Manager-in-Charge

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2008-09/328 · issued 19 Dec 2008. The plain-English explanation above is BankPulse’s own independent summary.

🖨 Print / Save as PDF 🔗 Copy link☆ Save for later

Topics: Co-operative Banks

Key dataSee the live numbers behind this topic: RBI Penalty Tracker, NPA / Asset-Quality Tracker — updated from official RBI data.

Key termsPlain-English definitions of terms in this circular — see the full Indian banking glossary. KYC / AML · Gross NPA (GNPA) · Deposit insurance (DICGC) · Scheduled Commercial Bank (SCB)