Banks must provide loan deal copy
RBI makes it mandatory for banks to furnish loan deal copy of the loan sanctionedApnaloan.com Research Bureau
23 Aug 2007
Banks have made it mandatory to provide a copy of
the loan agreement to the borrower, once the loan is sanctioned, according to
the latest RBI guideline.
Though RBI had mandated it in 2003 that banks need
to furnish a copy of the loan agreement to the borrower, many of the banks were
found flouting the norms and providing the copy only on
request.
Most banks provide a term sheet along with the
payment schedule that includes a break-up of the interest and principal for
EMIs. In fact, unlike what is prescribed in the May 2003 circular, banks also
get away by not informing the borrower about the change in terms and
conditions.
From now on, you can insist on a copy of the
agreement to get the details of the terms and conditions and other caveats
governing the credit facility finalised after negotiation. In addition, an
authorised official from the bank has to certify the document, says RBI
guidelines.
The circular had also said that banks need to
clearly mention the fee and charges for all priority sector loans of up to Rs 2
lakh.