The Reserve Bank of India (RBI) is a circular draft issued today, in which lenders are subject to foreclosure of floating rate loans (MSEs) granted to individuals and micro and small entities (MSEs) or advance payment of advance loans. said that no claims or fines should be collected. the purpose. However, for MSE borrowers, these instructions apply up to a total certification limit of 7.50 crores per borrower. These instructions will be implemented from the date of the final circulation direction, and regulators are seeking comment from the public by March 21, 2025.
“The availability of easy and affordable funding to MSES is extremely important, however, the Reserve Bank supervision is subject to the RES (registered entity) regarding the collection of foreclosure fees/salary taxes in the case of client-approved loans. or shows different practices between banks.
“In addition, certain REs may include restrictive terms in their loan agreements/contracts to prevent borrowers from switching to another lender in order to utilize lower interest rates or better terms of service. I know,” he added.
Banks must provide individual borrowers with the option to foreclose or advance payment of all floating rate loans.
These instructions apply, whether partial or complete, regardless of the source of funds used to seize/prepayment of the loan. The applicability of dual/special rate (fixed and floating combination) loan instructions depends on whether the loan is at a fixed fee or floating at the time of foreclosure/prepayment.
“In other cases, foreclosure claims/prepayment penalties must be taken by the board in accordance with RES’s policies if claimed, provided that the board is requested, except in such cases, the foreclosure fees/prepayment penalties imposed by RES. shall be based on the amount of outstanding in the case of cash credit/overdraft facilities and approved restrictions. Res shall notify loans of foreclosure/advance payments of loans without providing minimum lock-in periods. It shall allow it,” the central bank said.
Banks must clearly define a claim for seizing major statements of facts that have been extended during the payment of the loan. Lenders should also not retroactively file charges upon foreclosure. It was either exempt by the bank under any circumstances or not disclosed to the borrower in advance.
