When we look back at the week that was, one important thing we need to talk about is the fact that RBI has reprimanded banks for charging you more interest on your loans.
When we take a loan, we need to pay a certain rate of interest. Let us say the interest rate is 12 per cent and you have an idea of how much EMI you need to pay every month. However, there were ways in which banks were charging you higher interest by resorting to certain tactics.
In a notification on April 29, RBI pointed out the ways banks and other financial institutions were resorting to some unfair practices to charge you extra interest. Let us look at some of the ways this was being done.
In case the loan was disbursed by a cheque, the interest was charged from the date on the cheque. However, the customer was handed over the cheque a few days later. So he was paying more interest.
When you take a loan, the interest should be charged from the day the money hits your account. But, some banks were charging interest from the day the loan was sanctioned or the loan agreement was executed, thus leading to more interest.
Also, when the loan was disbursed or repaid during the course of the month, the bank was charging interest for the entire month and not for the specific number of days.
Finally, banks were taking advance interest but were taking into consideration the full loan for charging interest henceforth.
Coming down hard on such practices, RBI has also said that when such instances have been known, banks need to return excess interest and other charges to its customers. In case if you have a loan, do check with your lender whether you are eligible for a refund.
In other news, the Federal Reserve kept the interest rates steady, saying that it still is keen to eventually reduce rates, but recent inflation figures would mean that the rate cuts would take some time to come. Meanwhile, according to a Bloomberg survey, RBI is most likely to postpone an interest rate cut till the last quarter of 2024. So, we can expect India's central bank to cut rates later this year or early in 2025.
When it comes to your personal finances, it is very important to be very aware of how you are spending every rupee that you earn. It is your hard-earned money after all.
