Are there any laws that regulate the amount of processing fee a lender can charge?

Yes, there are regulations in India that cap the processing fees that can be charged by lenders. The Reserve Bank of India (RBI) has issued guidelines to regulate the processing fees and other charges levied by banks and other financial institutions. As per these guidelines, banks and NBFCs (NonBanking Financial Companies) can charge processing fees to cover their expenses for processing loan applications, but the fee should not exceed a reasonable amount. The RBI has also instructed banks to disclose all the charges and fees associated with a loan, including the processing fee, upfront to the borrower.