RBI directs banks, other lenders not to levy pre-payment charges on biz loans to individuals, MSEs
The directions will be applicable to all loans and advances sanctioned or renewed on or after January 1, 2026.
Mumbai, Jul 2 (PTI) The RBI on Wednesday directed banks and other lenders not to levy any pre-payment charges on all floating-rate loans and advances, including for business purposes, availed by individuals and micro and small enterprises (MSEs).
In a circular, the Reserve Bank said the availability of easy and affordable financing to micro and small enterprises (MSEs) is of paramount importance.
However, the Reserve Bank's supervisory reviews have indicated divergent practices among regulated entities (REs) with regard to the levy of pre-payment charges in case of loans sanctioned to MSEs, which lead to customer grievances and disputes, it said.
Based on a review of the supervisory findings and public feedback received on a draft circular, the central bank has issued the Reserve Bank of India (Pre-payment Charges on Loans) Directions, 2025.
For all loans granted for business purpose to individuals and MSEs, with or without co-obligant(s), a commercial bank (excluding Small Finance bank, Regional Rural bank and Local Area bank), a Tier 4 Primary (Urban) Co-operative bank, an NBFC-UL, and an All India Financial Institution 'shall not levy any pre-payment charges', said the directions.
Also, for all loans granted for purposes other than business to individuals, with or without co-obligant(s), a regulated entity (RE) shall not levy pre-payment charges, it said.
'A Small Finance bank, a Regional Rural bank, a Tier 3 Primary (Urban) Cooperative bank, State Cooperative bank, Central Cooperative bank and an NBFCML shall not levy any pre-payment charges on loans with sanctioned amount/ limit up to Rs 50 lakh,' it added.
The RBI also said the norms will be applicable irrespective of the source of funds used for pre-payment of loans, either in part or in full, and without any minimum lock-in period.
The RBI further said that in case of cash credit/ overdraft facilities, 'no pre-payment charges shall be applicable if the borrower intimates the RE of his/ her/ its intention not to renew the facility before the period as stipulated in the loan agreement, provided that the facility gets closed on the due date'.
According to the Directions, the applicability or otherwise of pre-payment charges will be clearly disclosed in the sanction letter and loan agreement. PTI NKD BAL BAL
This report is auto-generated from PTI news service. ThePrint holds no responsibility for its content.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
India Today
31 minutes ago
- India Today
2025 Bajaj Dominar 250 and Dominar 400 launched, price starts at Rs 1.92 lakh
Bajaj Auto has rolled out the refreshed 2025 Dominar lineup in India, introducing electronic and ergonomic updates, the new Dominar 400 is priced at Rs 2,38,682, while the Dominar 250 comes in at Rs 1,91,654 (both ex-showroom, Delhi).The headline upgrade for the 2025 Dominar 400 is the addition of Ride-by-Wire technology, enabling four selectable riding modes: Road, Rain, Sport, and Off-Road, which adjust throttle response and ABS intervention for varied riding conditions. The Dominar 250 retains its mechanical throttle but now also offers four ABS-enabled riding modes, bringing versatile control to Bajaj's quarter-litre motorcycles now feature a new bonded glass colour LCD speedometer borrowed from the Pulsar NS400Z, complete with an integrated visor to reduce glare and improve visibility. Enhancing touring capability, Bajaj has redesigned the handlebar for better long-distance comfort and added a GPS mount integrated into the rear carrier, making the bikes more touring-ready straight from the showroom. Mechanically, both models remain unchanged. The Dominar 400 continues to draw power from its 373cc, liquid-cooled single-cylinder engine producing 40bhp and 35Nm, while the Dominar 250 uses a 248.8cc single-cylinder motor delivering 27bhp and 23.5Nm. Both come equipped with a 6-speed gearbox and a slipper on the launch, Sarang Kanade, President, Motorcycle Business Unit, said, "At Bajaj Auto, we believe that a Dominar is more than just a machine – it's a gateway to real-world experiences. Traveling imparts knowledge that books cannot. It reveals character, develops resilience, and expands horizons. We are committed to spearheading the Sports Touring revolution in India with the 2025 Dominar range, which features motorcycles that are 'Born to Sprint' and 'Built to Tour'. The 2025 Dominar range is not just an upgrade, it's a declaration: the road belongs to those who don't hold back."'At Bajaj Auto, we believe that a Dominar is more than just a machine – it's a gateway to real-world experiences. Traveling imparts knowledge that books cannot. It reveals character, develops resilience, and expands horizons. We are committed to spearheading the Sports Touring revolution in India with the 2025 Dominar range, which features motorcycles that are 'Born to Sprint' and 'Built to Tour'. The 2025 Dominar range is not just an upgrade, it's a declaration: the road belongs to those who don't hold back.'With these updates, Bajaj aims to reinforce the Dominar's position in the touring to Auto Today Magazine- Ends
Time of India
37 minutes ago
- Time of India
State finance ministers' panel discusses ways to curb ITC frauds, sector-specific tax evasion
A panel of state finance ministers convened to address the escalating issue of tax evasion, particularly concerning Input Tax Credit (ITC) fraud, which has reached a staggering Rs 2 lakh crore. The Group of Ministers (GoM) also analyzed revenue trends, e-invoicing, and IT system enhancements. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads A panel of state finance ministers on Friday discussed tax evasions in specific sectors as it mulled over policies to check input tax credit (ITC) fraud which has reached a staggering Rs 2 lakh Group of Ministers (GoM) on GST revenue analysis under Goa Chief Minister Pramod Sawant also discussed comparative analysis of pre- and post-GST revenue trends, e-invoicing and IT system enhancements for better GoM also discussed state-specific policy suggestions for boosting revenue, and coordination between central and state tax administrations for plugging GST evasion."The meeting discussed state-wise revenue trend analysis, analysis of economic and other factors on GST revenue and integration of anti-evasion and compliance tool. The meeting also discussed policy recommendations for revenue augmentation," Sawant said after chairing the GoM GoM identified Input Tax Credit (ITC) fraud as a major issue under goods and services tax (GST) and states suggested various measures to prevent said the GoM flagged Rs 2 lakh crore of ITC fraud over the past years, with states like Gujarat, Telangana, and Rajasthan making presentations on best practices for GST revenue GoM would meet again soon and thereafter will submit its report to the GST Council , chaired by Union finance minister and comprising ministers from all March, the GST Council had reconstituted GoM on 'Analysis of Revenue from GST'. Chaired by Sawant, the GoM had nine members, including from Bihar (Samrat Chaudhary), Chhattisgarh (O P Choudhary), Gujarat (Kanubhai Desai), Andhra Pradesh (P Keshav), Maharashtra (Ajit Pawar), Punjab (Harpal Singh Cheema), Tamil Nadu (Thangam Thennarasu) and Telangana (M B Vikramarka).ITC fraud has been a major pain point for GST officials with fraudsters coming up with new modus operandi to defraud the 2024-25, central and state GST officers have detected 25,009 fake firms involved in fraudulently passing input tax credit (ITC) worth Rs 61,545 per data on ITC frauds unearthed by central and state GST officers, over the two years 2023-24 and 2024-25, a total of 42,140 fake firms were detected, which were involved in fraudulently generating ITC of over Rs 1.01 lakh crore. A total of Rs 3,107 crore was recovered by way of blocking of ITC, and 316 arrests have been made.
Time of India
an hour ago
- Time of India
National Herald case: 'Strange, unprecedented,' Sonia Gandhi's counsel tells court; cites 'Hamlet'
Sonia and Rahul Gandhi NEW DELHI: Congress leader Sonia Gandhi on Friday criticised the Enforcement Directorate 's (ED) money laundering case against her in connection with the National Herald, calling it 'truly a strange case'. Her lawyer Abhishek Manu Singhvi, appearing in a Delhi court, argued that the ED's case made no sense and compared the situation to staging Hamlet 'without the Prince of Denmark'. 'This is truly a strange case. More than strange. Unprecedented. This is an alleged case of money laundering, without any property, without use or projection of property,' Singhvi submitted before Special Judge Vishal Gogne. He also pointed to the long delay in ED's action. 'They did nothing for several years and instead picked up a private complaint,' Singhvi said. 'They are, obviously, people associated with the Congress. To have the National Herald in a body not associated with the Congress would be worse than having Hamlet without the Prince of Denmark,' he told the court. The ED has accused Sonia and Rahul Gandhi , along with Motilal Vora, Oscar Fernandes, Suman Dubey, Sam Pitroda, and others, of laundering money in the alleged fraudulent takeover of assets worth over Rs 2,000 crore belonging to Associated Journals Ltd (AJL), the publisher of the now-defunct National Herald newspaper. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Trending in in 2025: Local network access control [Click Here] Esseps Learn More Undo The ED in its argument had claimed that Sonia and Rahul Gandhi were 'beneficial owners' of Young Indian, a not-for-profit company that took over AJL's assets after the Congress party gave a Rs 90 crore interest-free loan to AJL. That debt, the ED argues, was fraudulently converted into equity in favour of Young Indian, giving it ownership of AJL's assets. On July 3, ASG Raju told the court that the entire operation was orchestrated to favour Sonia and Rahul Gandhi, who together held 76% shares in Young Indian. 'They (Young Indian) didn't even have the wherewithal to pay Rs 50 lakh. During this time, Rahul and Sonia were directors of the company along with Sam Pitroda and others,' Raju said. He described it as a 'classic case of money laundering' where fabricated rent receipts and fraudulent payments were used to siphon off funds. Singhvi, further argued that the entire purpose of Young Indian was to make AJL debt-free. 'Every company is entitled under law and does, every day, make their companies get free by a variety of instruments. So you take away the debt and assign it to another entity. So this company becomes debt free,' he said.
