The RBI has introduced the Pre-payment Charges on Loans Directions, 2025 to curb unfair lending practices and ensure fair treatment of borrowers, especially Micro and Small Enterprises (MSEs). These guidelines eliminate or cap pre-payment charges based on loan type, amount, and lender category. Effective from January 1, 2026, they aim to enhance transparency, borrower flexibility, and ease of credit without penalising early repayments. The article discusses several key focus areas, which include:
‣ Key Directions on Pre-payment Charges
‣ Other Situations and Exceptions
‣ Disclosure Requirements
‣ Effective Date and Applicability
