What is Double EMI Deduction?
Choosing to avail a business loan from a lending institution rather than seeking equity investment might be a prudent decision to fuel expansion and grow a sustainable business in the long term. Business loans enable simple and faster access to funds to fulfil immediate business requirements. Whether it is purchasing inventory or necessary equipment, hiring manpower or adopting robust technology to automate operations, etc. or more, without the businesses having to lose their equity shareholding. Further, interest payment towards business loans also helps businesses to reduce their tax liabilities. Timely repayment history and financial data submissions keep the businesses on the forefront of all compliances. It also helps in building trust and giving a boost to the credit score of the business entity.
Despite all these benefits, it is also imperative for businesses to carefully manage Equated Monthly Instalments (EMIs) by closely tracking the repayment process. There have been multiple instances where businesses have found their business loan EMIs been deducted more than once which could be innately frustrating and interrupt their financial planning and cash flows. Double EMI deduction could happen as a genuine error or as means to defraud the borrower, in both cases it is advisable to be careful and monitor all bank related transactions closely. Read further to find out more about double EMI deductions on business loans, methods to identify them, and process to ensure refund of double EMIs keeping your business finances on track.
Claim Refund for Double EMI Deductions on Business Loans
Common Causes for Double EMI Deduction on Business Loans
Double EMI deduction on business loans is when a lending institution deducts the same interest amount twice in a month from a business bank account unnecessarily. Deduction for the same amount twice over a prolonged period could be worrisome for businesses, however adequate awareness to spot and deal with such extra charges could be resolved easily.
A business loan account could be levied EMI charges more than once due to the following reasons-
- Technical Glitches- Inaccurate EMI deductions may occur due to issues in the banking system or issues in loan processing.
- Incorrect EMI calculations- If the lending institution makes any error in correct calculation of EMI it may deduct more than requisite amount as EMI payments for business loan.
- Delayed Prepayment Updates- Where the borrower business has paid any EMI in advance the lending institution may fail to adjust the amount accordingly causing the amount to be debited more than once at previous rates.
- Manual processing errors- Excessive deductions may result from errors committed when processing EMI payments manually.
- Glitches in Automatic Payment systems- Where the automated payment system of the lending institution faces technical glitches inadvertently processing EMI twice.
It can be challenging for the business owners to identify the problem because both charges frequently show up on the same transaction date. Such double EMI deductions might result in cash flow issues in addition to uncertainty particularly if the company depends on accurate budgeting. Any borrower business must promptly identify double EMIs on business loans since they might hamper liquidity and interfere with financial planning.
Majority of the MSME Borrowers do not regularly cross check the interest amount debited by Banks on a monthly basis, owing to the following factors:
- Giving less importance to loan monitoring and leaving the same upon the banks
- Assuming banks to be error free due to automations etc.
- Hesitation to challenge the bank officials due to not being sure of own calculations
Businesses will be surprised to know that most of the time, there are lots of discrepancies in such calculations from the bank’s end – either knowingly or unknowingly.
Hence, it is imperative that someone cross check these calculations timely and regularly and then inform the banker of corrective measures needed (if any).
Please note that if you inform the banks too late about it, they shall not be able to help you much on this to reverse the excess amount.
Identification Double EMI charges on Business Loans
Provided below are some of the steps to be taken promptly by the borrower business in case they feel their business account has been debited more than once during the same period
Review your business loan statement-
Carefully review your business loans statement or transaction records to rule out any inconsistencies. Usually, such double EMI charges are levied within the same transaction date.
Compare Dates-
Examine the dates in which the charges have been levied. Occasionally, transactions made on the same day due to a payment system error may result in double EMI charges. So the businesses should keep an eye on same date and same value transactions.
Monitor accounts on a regular basis-
Keep track of your business account transactions on regular periods. Set reminders to monitor payments so that any duplicate charges are identified promptly. Here BankKeeping can come to your help with its advanced software that not just create a specific banking calendar for your business to monitor all bank related due dates, but also help in monitoring and making all necessary paperwork for your business communication with the bank.
Review your loan agreement-
Verify the schedule by cross-checking it with your business loan agreement and comparing EMI deduction dates shown with the actual deductions. this will also help businesses keep a track of the interest payment dates and hence easily monitor double EMI deductions if any. Experts like Bankkeeping can help ensure accuracy in monthly interest debits.
Examine the lending website portal recording transactions-
In order to ensure that no duplicate charges or double EMI deductions have been levied, check the client portal of the lending institution to review loan repayment history. You can also manage all your banks at one place with Bankkeeping’s comprehensive dashboard.
How to address and reclaim Double EMI deductions on Business Loans?
Provided below is the step-by-step process to be followed to ensure a smooth and timely refund process for double EMI deductions for your business loan account-
Check whether there have been any actual EMI debited twice-
Review bank statements and loan accounts to ensure that the debit from the business loan account has occurred twice during the same period.
Communicate the matter with the lending institution-
Visit the closest branch or get in touch with the concerned customer service segment of the lending institution. Provide details to the lending institution regarding double EMI deduction, including the date of deduction, loan account details, and transaction reference number. Additionally, submit relevant documents such as bank records, transaction receipts, or account details for your business loans.
Make a formal request for refund-
Upon assessment of your claim by the lender formally request a reimbursement for the additional EMI which was wrongly deducted. Additionally, communicate your choice as to whether the EMI shall be adjusted to the loan balance or refunded to the business bank account. This will ensure no ambiguity at a later stage of refund. The business can decide on this choice depending on the liquidity requirements and cash flows of the business.
Confirm refund time frame-
Make sure you comprehend their procedure and adhere to all necessary paperwork / documentations to be submitted along with the double EMI reimbursement application. Do enquire about a precise time frame for the reimbursement so that followup becomes easier. It is to be noted that the refund may take anywhere from certain business days to weeks to be refunded to the business account.
Monitor your business loan status-
Monitor your business loan status regularly to ensure that the excess EMI charges have been reversed. The business may have requested a notification/call post reversal but that may not happen therefore it is advisable to keep track of your account. Additionally, keep track of any modifications or changes made to the loan account during the period.
Track refund status and follow up with the lender-
Monitor the return status and contact your lender again if the issue is not resolved as per the grievance redressal process. Maintain a record for all correspondence, including emails and messages with the lender. Delays in business can negatively impact the functioning of the business, therefore it is advisable to always be at the top of things when it comes to business banking and loans. This can be achieved by the help of BankKeeping who are experts in handling business banking for clients across sectors.
Check for the impact of the loan tenure-
Make sure that the loan tenure and any additional fees have not been impacted by the additional loan deduction. The repayment plan should be adjusted to reflect the updated amount as per the request made by the borrower business.
Escalate the matter with higher authorities-
When the lending institution fails to resolve the matter regarding Double EMI deduction despite following the above-mentioned process, approach the Reserve Bank of India portal or Banking Ombudsman. Keep all previous communication and documents ready for escalating the matter with the RBI.
Process of grievance redressal in case the lending institution refuses to refund the additional EMI amount?
Therefore, if the lending institution fails to provide an appropriate redressal system for the issue of double EMI deduction for business loans, the borrower business entity could seek redressal through the following means –
- The RBI Complaint Management System (CMS) to file a complaint against the lending institution for overcharging the borrower client.
- Borrower Business entities could also approach the Banking Ombudsman on refusal of the lending institution to refund the additional EMI deducted on business loans. The banking ombudsman is an official appointed by the government holding authority to arbitrate conflicts between banks and clients.
- Additionally, borrower businesses could make a complaint and seek help to the Consumer Redressal Mechanism through protection groups such as Consumer Protection groups.
Throughout the process, maintain comprehensive documentation records of emails, correspondence and other necessary documentation to support your claim of double EMI deduction against the lending institution.
Conclusion
Although double EMI deduction for your business loan could be annoying, early detection from the business bank account could make the process simple and faster.
To avoid such instances, monitor your business loan account regularly and maintain prompt communication as soon as you find any inconsistencies. Maintain all the information necessary to speed up the process and follow up to ensure a seamless loan repayment process without unnecessary deductions impacting your business budget by staying vigilant.
Managing everything on its own may be a tough task for the businesses, especially the SMEs. They may not have the bandwidth to handle all banking related negotiations, report preparations and even staff to be able to negotiate better with the banks/lenders or factors, even after having a sound and favorable position in terms of business stability. This is where you may need the help of experts like BankKeeping who will help your business at each stage of attaining a business loan, reducing interest or even negotiating the terms that may have any restrictive covenants thereof. The loan needs to be serviced and all necessary paperwork can be handled by experts so that there is no delay in submissions and no penalties levied by the banks.
We help you consolidate your banking needs, create a banking compliance calendar so that you never miss a deadline and even help you reduce the banking cost and communicate better with the banks in the desired format.
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