In general terms one can understand that a “Commitment fees” is being charged for some approved facility which can be drawn down in future at the same terms which has been agreed initially between lender and borrower. Banks are usually charged for some fees to provide this kind of facility which is usually called commitment charges/ fees.
And “Loan processing fees” are something which once can understand that the amount of upfront charges/ payments which are being recovered by a Bank at the time of disbursing the loan (net of loan) to the borrower which usually been called as facility/ or arrangement fees etc.
Refer below some of the extracts governing accounting policies on such issues of by one of private sector bank (listed in India) which uses current accounting practices (as Ind-As will be applicable on Banks w.e.f. from 2018 as notified by MCA) as mentioned on page 137 of the report-
Reader can download/ refer the full annual report of the Bank by using link-https://www.icicibank.com/managed-assets/docs/investor/annual-reports/2016/icici-bank-annual-report-2015-16.pdf
Now,
Let’s first understand COMMITMENT FEES which are being charged on account of certain arrangement between bank and a borrower to draw down certain facility in future or whenever it is agreed based on the agreed terms and conditions agreed initially. Ind-As 109 – “Financial Instruments” para 2.3 talks.................for further read please refer http://gyanifrs.com/2017/02/commitment-fees-and-processing-fees-on-loans-ind-as-ifrs/
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