The Asian Age

RBI: Banks must set loan time­line

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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.

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