RBI lending directive: No more pre-payment charges; borrowers to get freedom from 2026

The Reserve Bank of India (RBI) has prohibited banks and other regulated lenders from charging prepayment fees on floating-rate loans taken by individuals for non-business purposes. Effective January 1, 2026, this directive aims to increase transparency and borrower flexibility. The new rules consolidate previous circulars and ensure clear disclosure of any applicable prepayment charges.

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