India - RBI Prepayment Charges Guidelines 2025: What Indian Lenders Must Know. - Conventus Law

RBI Scraps Prepayment Penalty for MSME Loans - SMEVENTURE

The Reserve Bank of India (RBI) has issued a directive to eliminate pre-payment charges on all floating rate loans and advances. This reform, effective from January 1, 2026, is expected to ease the financial pressure on micro and small enterprises (MSEs), many of which rely heavily on flexible credit to manage day-to-day operations and expansion. The move applies to loans taken by individuals and MSEs for both business and non-business purposes,…

India - RBI Prepayment Charges Guidelines 2025: What Indian Lenders Must Know. - Conventus Law

Introduction  The Reserve Bank of India (RBI) has issued the Prepayment Charges on Loans Directions, 2025 on July 2, 2025. These will come into effect for all loans sanctioned or renewed on or after January 1, 2026. The objective is to standardise the levy of prepayment or foreclosure charges on loans and advances across banks and NBFCs in India.  Applicability  These directions apply to Commercial Banks (but excluding Payments Banks), all Non-B…