RBI: Banks must set loan timeline
Mumbai, Sept. 1: To expedite credit decision, the Reserve Bank on Monday asked banks to set a timeline for disposal of loan proposals but did not ascribe a particular time frame for the same.
“Banks should clearly delineate the procedure for disposal of loan proposals, with appropriate timelines, and institute a suitable monitoring mechanism for reviewing applications pending beyond the specified period,” RBI said in a notification.
The central bank also asked banks to make suitable disclosures about timelines by conveying credit decisions through their websites, notice boards and product literature, among others.
However, it said that banks should not compromise on due diligence requirements.
The move came after RBI noticed that there have been inordinate delays by banks to convey credit decisions, leading to delays in project implementation.
In its earlier guidelines, the RBI had stipulated that the timeframe within which loan applications up to ` 2 lakh ought to be disposed of, should be indicated while accepting loan applications.
“It is felt that a similar practice of time- bound decision making may be required in the case of other loans too,” the regulator said, adding that banks must put in place the required system within 30 days.
Meanwhile, the Reserve Bank also said bank accounts will not become inoperative if a dividend cheque has been credited in it in the previous two years.
“Since dividend on shares is credited to savings bank accounts as per the mandate of the customer, the same should be treated as a customer induced transaction. As such, the account should be treated as operative account as long as the dividend is credited to the savings bank account,” Reserve Bank of India said in a notification.
A bank account become inoperative or dormant if no credit or debit transaction has been conducted for a period of two years.
The Reserve Bank of India further said that such, the account should be treated as operative account as long as the dividend is credited to the savings bank account.
This clarification has been issued in view of the doubts raised by some bankers whether an account in which only dividend has been credited can be treated as inoperative after two years.