The Pro Guide about Personal Loan Disbursement! | Personal Loan Stories - Kotak Mahindra Bank
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11 AUGUST, 2021

It has been a frugal 18 months for everybody, with the COVID-19 pandemic wreaking havoc on everyone’s plans. Plans that included holidays, home refurbishment, big-ticket purchases like refrigerators, TVs, bikes, cars, etc., and so on. Banks are now beginning to offer personal loans at attractive rates to encourage all the pent-up spending among us.

You can apply for a personal loan to fulfill your wishes for a better lifestyle. As a prospective personal loan applicant, here’s a pro guide about personal loan disbursement for you.

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How a Personal Loan is Disbursed?

Now that you are ready to opt for a personal loan, let us walk you through the process.

Apply for a loan

To receive a personal loan, you need to apply for one. You can do it physically at the nearest branch of your chosen lender. Or, you can apply for an instant personal loan online. You just have to fill out the form, provide identity and financial proof documents, and submit them.
Offline loans may take 1-3 days to be approved, unlike online loans which are processed within 1 day.

Know the fees involved

Whether it is an offline personal loan or the online personal loan, the issuing bank charges fees for its services. These are borne by the loan applicant. The applicant can either pay this upfront or deduct it at loan disbursal time. These fees include:

  • Processing fees: Typically, these fees are up to 2.5% of the loan amount, but this can vary from bank to bank. For instance, Kotak Mahindra Bank’s processing fees are capped at 2.5% plus GST. For ICICI Bank, it is up to 2.25% plus GST.
  • Verification fees: Banks assign third-party vendors to verify the applicant’s identity, their residence, as well as all the other documents they need to submit to qualify for the loan. This cost is passed on to the loan applicant.
  • GST: Goods and services tax is charged at the current 18% rate on any other service that is part of the loan disbursement process.


So, you have passed all the checks and the loan has been approved. Now it is only a question of its disbursement.
Personal loan disbursement is usually swift, within 24 hours of approval. Banks usually create a cheque or a demand draft for the amount (minus the above-mentioned fees). This cheque is either sent to you via courier or you can choose to collect it in person at the bank. Increasingly, banks find it easier to transfer the amount to your account by NEFT transfer.


This is an important step in the loan disbursal. The bank sends a confirmation letter along with a welcome kit. This kit contains the EMI calendar, as well as a detailed table of the break-up of interest and principal components of the monthly EMI. This break-up is valuable during annual tax filing to calculate any rebate that you can avail of.


When you apply for a personal loan and get the loan amount in your account, you are probably listing down the ways to spend it. But always remember to pay your EMIs on time. Late payments or non-payments attract significant penalty charges of 2% to 3% per month. So, spend the loan amount wisely, pay your EMIs promptly, and enjoy the benefits.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.