Srinagar, July 3 -- The Reserve Bank of India (RBI) has announced that lenders will no longer be allowed to impose pre-payment penalties on floating-rate loans. This new regulation, set to take effect on January 1, 2026, will apply to all loans and credit facilities sanctioned or renewed on or after that date.
The RBI stated that the decision is aimed at making credit more accessible and affordable, especially for Micro and Small Enterprises (MSEs), and at shielding individual borrowers from unfair lending practices.
As per the RBI, no pre-payment charges can be levied on floating-rate loans taken by individuals for non-business purposes - even in cases involving co-borrowers.
For loans used for business purposes by individuals and MSE...
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