reserve Bank of India
The Reserve Bank of India (RBI) has taken an important decision giving great relief to the borrowers. Under the new rule, banks and financial institutions will no longer be able to charge any pre-payment or foreclosure charge on floating rate loan (loan which varies over time). This rule will apply to both individual and commercial loans, especially for micro and small enterprises, it will be very beneficial.
How long will these rules be applicable?
This new rule will apply to all the loans that will be approved or renewed after 1 January 2026. Till now, this discount used to be available only to those who used to take loans for personal reasons. But now RBI has also increased its scope and included business loan, which will provide relief to small traders.
RBI said in its circular that it is necessary to provide easy, transparent and inexpensive finance to small businesses in the country. It was seen in many places that banks and NBFC adopt different rules, which lead to disputes between customers. That is why now the entire system has been made uniform.
Who will benefit?
According to the new rule, large commercial banks, top layer NBFCs, All India Financial Institutions and Urban Cooperative Banks will no longer have to charge any pre-payment charge from MSES and individual traders. Even small banks and NBFCs will not charge any charge on non-business loans up to Rs 50 lakh.
Also, whether the customers repay the loan with their money or any other funding will not be charged. There will also be no lock-in period. Apart from this, these rules will also be applicable on cash credit and overdraft accounts, provided that customers should close the account by giving information on time.
There will also be help from the government. SIDBI i.e. Small Industries Development Bank of India will help in cheap loans and research funding to give easy loans to small entrepreneurs.
At present, many MSE companies including more than 600 drones and technical startups are active in India. In such a situation, this step will make small traders financially and strong, as well as make the process of repaying the debt easier.