Loan Approval Time:RBI New Rule Comes

Soon, you will not have to wait endlessly for your bank to communicate its decision on your loan proposals.

The Reserve Bank of India's (RBI) recent diktat to banks asking them to clearly indicate the timelines for disposing of loan applications will come into effect within a month, paving the way for quicker processing of loan applications.

Remember, this does not mean that your loan will be sanctioned in the specified time frame -the bank has to take a call on approving or /  rejecting the proposal within this period.

The guidelines on fair practices code for lenders require banks & financial institutions to devise a system of acknowledging receipt of all loan applications.

“Time frame within which loan applications up to Rs. 2 lakh will be disposed of should also be indicated in acknowledgement of such applications,“ RBI states.

So far, this was applicable only to loans with ticket size of up Rs. 2 lakh. Now, it has been exto ` tended to all loan applications.The timelines for conveying decisions on loan applications will have to be displayed at bank branches, websites and so on.

“Applicants will now at least be sure as to by what time they can expect the sanction and this will certainly help them plan accordingly. Even if the loan is not to be sanctioned, the bank will have to inform the applicant within the specified time frame. This will enable them to look for alternative sources of finance,“ says Mr. V.N. Kulkarni, chief credit counsellor with the Bank of India-backed Abhay Credit Counselling Centre.

This will be of help to home loan borrowers who have to put up with delays while finalising the purchase of a house they may have identified.

Similarly, businesses of small & medium enterprises (SME) will not have to suffer due to delays in loan processing.

Do note that the code of commitment to customers adopted voluntarily by banks already stipulates the time frame for loan applications with a ticket size of up to Rs. 20 lakh, too.

As per this code, banks are required to communicate their decision on loan application for a ticket size of up to Rs. 20 lakh within 30 working days from the date of receipt.

At your end, it is important to ensure that you have taken all steps to facilitate quicker processing and approval.

For instance, make sure you go through the checklist of documents required by the bank and submit them along with the loan application.

Share: