<ul data-eligibleForWebStory="false"><li>The RBI has directed banks and lenders not to levy pre-payment charges on floating-rate loans taken by individuals and micro and small enterprises (MSEs) for business purposes, starting from Jan. 1, 2026.</li><li>This directive aims to ensure easy and affordable financing for MSEs and individuals. The RBI observed varied practices among regulated entities regarding pre-payment charges on MSE loans, leading to customer grievances.</li><li>The Reserve Bank of India (Pre-payment Charges on Loans) Directions, 2025 specify that pre-payment charges cannot be imposed on business loans for individuals and MSEs. Different categories of banks and institutions have specific guidelines on pre-payment charges.</li><li>The rules apply regardless of the source of funds used for pre-payment, without any minimum lock-in period. Norms regarding pre-payment charges will be clearly disclosed in the sanction letter and loan agreement.</li></ul>

RBI Directs Banks, Other Lenders Not To Levy Pre-Payment Charges On Business Loans To Individuals, MSEs

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