RBI eliminates pre-payment charges on business loans for individuals and MSEs

The RBI has mandated that banks and NBFCs cease charging prepayment penalties on business loans to individuals and MSEs, regardless of co-obligants. Small finance banks, urban co-operatives, and regional rural banks must also waive these charges o...

By ET Bureau | Jul 03, 2025, 05.46 AM IST

The directions are 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, RBI said.

MUMBAI: RBI has directed banks and NBFCs to stop levying pre-payment charges on all loans granted for business purpose to individuals and MSEs, with or without co-obligant(s).

Small finance bank, urban co-operatives and regional rural banks shall also not levy any pre-payment charges on loans with sanctioned amount/ limit up to ₹50 lakh. The directions are 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, RBI said.

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