Floating Rate Loans: A big gift from RBI, now loan takers will not have to pay this charge..

Recently, RBI has taken a very important step for the loan holders. This will not only benefit the customers but also the banking system will be able to run better. Now RBI has given a proposal to get rid of the problem of pre-payment charges of the loan takers. Given the problem of pre-payment charges of the loan takers, RBI has proposed to abolish the penalty. Let us know about this in detail through this news.

Know what are floating rate loans-

It depends on you whether you take the loan at a fixed rate or floating rate (Floating Rate kya hai). Fixed-rate loan rates are those in which the interest rate remains the same during the entire period of the loan, in which there is no change. On the other hand, floating loans (RBI proposal floating rate loans) are those loans whose interest rates keep changing based on RBI's repo rate or MCLR (Marginal Cost of Funds-Based Lending Rate). Floating rates keep changing as per the decisions taken by RBI on policy interest rates.

Opinion has been sought from the concerned parties-

However, only a proposal has been made by RBI (Reserve Bank of India) in this regard. If this rule comes into force, then it will now apply to Micro and Small Enterprises along with Individuals. Currently, RBI has issued guidelines in this regard and has sought opinions from the concerned parties by March 21, 2025.

After which a final decision will be taken regarding this proposal. In the guidelines, RBI has stated that if this rule comes into force, then any person who takes a floating rate loan and repays it before time, then no foreclosure charge or pre-payment penalty will be recovered from him.

The final decision will be taken in March-

However, this exemption will not be applicable in the case of business loans. Apart from business loans, except Tier 1 and Tier 2 Urban Co-operative Banks and Base Layer NBFCs, all financial institutions will not be charged any fee on Floating Rate Business Loan given to Micro and Small Enterprises. According to the rules, whether the person has taken the loan alone or jointly with someone. No charge will be taken. However, the final decision on this will be taken in March.

This is how customers will benefit-

RBI says that the rules are going to apply to all types of floating-rate loans. Whether the person has taken this loan from anywhere and has repaid the loan amount a little or fully. However, in the case of (MSEs), this exemption will be available, but only on the prescribed loan limit.

Let us tell you that if the total loan of MSE is more than Rs 7.50 crore, then this rule will not be applicable. RBI's draft guidelines mention that banks cannot keep a minimum lock-in period on any loan. Now customers can repay the loan early as per their convenience.

Disclaimer: This content has been sourced and edited from Hr Breaking. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.