July 3, 2025

RBI borrower protection

Loans

RBI bars pre-payment charges on floating rate loans to boost borrower freedom

“[The] Reserve Bank’s supervisory reviews have indicated divergent practices amongst Regulated Entities (REs) about levy of pre-payment charges in case of loans sanctioned to MSEs, which led to customer grievances and disputes,” the central bank noted in the RBI (Pre-payment Charges on Loans) Directions, 2025 on July 2. More critically, it flagged that certain lenders

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