Lenders usually earn lots of of crores of rupees by charging curiosity even earlier than the shopper realises the cheque, usually from the date of sanction of the mortgage, business insiders mentioned.
On April 29, nevertheless, the banking regulator directed all lenders to cost curiosity from the date of precise disbursement of the funds to the shopper after its annual inspection revealed cases of lenders resorting to unfair practices in charging of curiosity. “Earlier, lenders have been taking about 30-45 days to consummate a mortgage settlement, they usually have been freely charging rate of interest through the interval with out the precise quantity being disbursed to the shopper,” the CEO of a housing finance firm mentioned on the situation of anonymity.
“So, clearly, it is a massive revenue hit for mortgage lenders, particularly,” the particular person mentioned.
‘Again to the Drawing Board’
Lenders usually take an extended interval to course of house loans.
Analysts mentioned the RBI diktat might lead to decrease mortgage progress and softer margin progress, particularly for housing finance firms.
“April is usually the weakest month for all mortgage lenders, and the RBI round on curiosity earnings recognition solely on cheque realisation has despatched mortgage lenders again to the drafting board to re-strategise their sourcing fashions,” mentioned Abhijit Tibrewal, analysis analyst at Motilal Oswal.
“Mortgage lenders may report weaker disbursement momentum,” he mentioned. “This transfer might additionally lead to a steeper NIM (internet curiosity margin) compression.”
On the finish of Might 2024, complete house mortgage excellent within the nation stood at greater than Rs 27 lakh crore, rising at 40% in a 12 months.
Some business officers mentioned the RBI transfer might additionally influence mortgage steadiness transfers.
“We’re seeing a success on steadiness transfers as banks want a cheque from our finish to shut the mortgage,” mentioned Navin Saini, enterprise head – MSME at Arka Fincap, a non-banking entity.
“A greater thought is to simply take an intimation from the brand new lender and an official communication to shut the mortgage, slightly than charging the shopper within the interim interval. Typically this course of takes two months as properly. Now we have communicated the identical to the regulator as properly,” he mentioned.
Earlier, the RBI’s annual inspection revealed that lenders have been charging curiosity on the date of execution of the mortgage settlement and never from the precise disbursement date.
Within the case of loans being disbursed by cheque, lenders have been charging curiosity from the date of the cheque and never when the cheque was handed over to the shopper a number of days later.
Additionally, some lenders have been charging curiosity for your entire month, slightly than charging curiosity just for the interval for which the mortgage was excellent.
“These and different such non-standard practices of charging curiosity aren’t in consonance with the spirit of equity and transparency whereas coping with prospects,” the regulator famous in its round. “These are issues of great concern to the Reserve Financial institution. Wherever such practices have come to mild, the RBI by means of its supervisory groups has suggested the regulated entities to refund such extra curiosity and different prices to prospects.”