Can a lender disburse a loan after borrower cancelled it post e-sign but before disbursement?
Feb 01, 2026
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Banking Law
► I applied for a loan through an NBFC/digital lender and completed the e-sign of the loan agreement.
On 4th January at around 8:30 PM, I clearly informed the lender’s executive that I do not wish to proceed with the loan and requested them to stop the disbursement immediately if it was not yet done. I also sent a cancellation email the same day.
Despite this prior communication and without giving me any reply or confirmation, the lender disbursed the loan amount into my bank account the next day at around 10:30 PM.
After disbursement, the lender did not respond to my cancellation email and did not communicate anything regarding why the loan was disbursed despite my withdrawal of consent.
I have not used the loan amount and am willing to return it, but the lender is charging interest and treating the loan as active.
My questions are:
1. Is a borrower legally allowed to cancel/withdraw consent for a loan after e-sign but before disbursement?
2. Is disbursement valid if the lender was informed in advance to cancel and still went ahead?
3. Does the lender’s failure to respond to my cancellation email amount to deficiency in service or unfair trade practice?
4. What legal remedies are available to me under Indian law (Consumer Protection Act, RBI guidelines, Contract Law)?
Please advise.
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