Mandatory 30-Day Loan Disbursal Time

The Reserve Bank of India (RBI) has come down heavily on commercial banks for causing inordinate delays in conveying their credit decisions/credit disbursal. In its latest notification dated 1 September 2014, all banks have been asked to carry out due diligence before arriving at credit decisions to ensure timely and adequate availability of credit. RBI has said that banks must put in place loan disbursal timelines within 30 days of the RBI circular. Banks are also expected to make suitable disclosures on the timelines for conveying credit decisions through their websites, notice boards, product literature, etc. Leading bankers have opined that this move could push banks to cut procedural delays. They say that individual banks already have their own internal guidelines and timelines for disposal of small loans. A centralized system as suggested by RBI will help in speeding up matters. Under the RBI guidelines on Fair Practices Code for lenders, it has been stipulated that the time frame for disposal of loan application up to Rs 200,000 should be indicated at the time of accepting the loan application.