You don't even know and the banks cut your pockets! These are the 4 ways in which more interest is charged on the loan.
Just a few months ago, the Reserve Bank of India (RBI) had told banks and NBFCs not to charge extra interest from customers. There was a complaint that banks were charging more interest unfairly. Let us know 4 such ways in which banks were charging you extra interest.
RBI had told the banks that there is a need to be fair and transparent in this matter. Banks were told that many complaints are coming against them and such cases have come to light in which more interest than the prescribed limit has been charged on the loan given to the people. Let us know about the ways of charging extra interest.
Many banks were charging interest from their customers on the loan given to them from the date of its approval. Banks should charge interest from the day the loan amount reaches the account of the people.
Something similar was also seen in the case of giving loan through cheques. It was found that banks were charging interest from the date of the cheque, whereas the cheque was handed over to the customer several days later and interest should be charged from the date of handing over the cheque.
In case of loan disbursement or repayment during a month, some banks were charging interest rates for the entire month. In such a case, the banks should charge interest only for the days of the month for which the loan is outstanding, and not for the entire month.
In some cases, it was also observed that banks were recovering one or more installments in advance, but were calculating interest on the entire loan amount. Seeing all this, RBI said that such non-standard practices of charging interest, which are not in line with the spirit of fairness and transparency while dealing with customers, are a cause of "serious concern".