What changed
RBI observed that some banks were not accepting NEFT inward transfers for credit to loan accounts, causing customer inconvenience, even though they accepted ECS debits for repayments. The circular directs all banks to allow customers to use NEFT as an electronic mode for loan EMI payments and repayments.
What it means for you
Banks must now enable NEFT as a payment option for loan accounts, removing a barrier that forced customers to use other modes. This aligns with NEFT's growth and popularity, ensuring uniform customer convenience across the banking system. Lenders need to update their systems to accept NEFT credits for loan repayments without restrictions.
What you must do
- Update loan account systems to accept NEFT inward credits for EMI repayments and other loan payments.
- Communicate the new NEFT repayment option to customers through channels like SMS, email, and branch notices.
- Ensure compliance with this directive and acknowledge receipt to RBI as instructed.
- Review and remove any internal policies that previously restricted NEFT for loan account credits.
Who it affects
All member banks participating in NEFT, Loan account customers seeking electronic repayment options, Bank IT and operations teams handling payment systems
Why did RBI issue this directive on NEFT for loan accounts?
RBI received customer complaints about banks not accepting NEFT credits for loan repayments, causing inconvenience. Only a few banks followed this restrictive practice, while they accepted ECS debits, so RBI mandated uniform acceptance.
Does this apply to all types of loan accounts?
Yes, the circular covers all loan accounts where customers make EMI payments or repayments, requiring banks to allow NEFT as an electronic mode.
What should banks do if their systems currently block NEFT for loan credits?
Banks must immediately update their systems to accept NEFT inward transfers for loan account credits and ensure compliance with this RBI directive.