New Delhi: RBI When individuals, small and micro enterprises try to repay their loans early, banks impose penalties. The Reserve Bank of India has urged banks to allow early repayment of loans without any penalty. The Reserve Bank has also released a draft regulation in this regard.
What is the new RBI rule for loans?
These changes have been proposed only for loan schemes with different interest rates. Banks other than the first and second phase urban cooperative banks have been advised to provide this facility for loans provided for the business needs of individuals and small and micro enterprises.
It has also been informed that no conditions related to the time limit should be imposed for early repayment of loans.
Apart from these, it has been informed that if penalty is levied in other cases, it should be subject to the policy approved by the board of directors of the respective banks.
During the regulatory inspections of the Reserve Bank, it was revealed that banks follow different practices in imposing penalty for early repayment of loans.
After complaints started coming from customers in this regard, the Reserve Bank has released this draft.
It has been informed that the concerned institutions and the public can express their views on the matter till 21st of next month; after which a final decision will be taken in this regard.
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