RBI Guidelines on Penal Charges on Loan Accounts
The Reserve Bank of India's (RBI) latest guidelines on penal charges on loan accounts have come into effect from 1st April, 2024,
About the Guidelines
- Prohibition: The norms prohibit commercial banks and finance companies from charging borrowers’ penal rates on loan defaults or any other non-compliance event.
- Penal Charges: Under the new rules, penalty, if charged, for non-compliance of the material terms and conditions of the loan contract by the borrower should be treated as ‘penal charges’.
- Penal Interest: It cannot be levied in the form of ‘penal interest’ that is added to the rate of interest charged on the advances.
- No ....
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