If you also have a loan running in your name, then RBI has given you a big gift during the festive season. Actually, in the RBI's MPC meeting, the members of the MPC meeting have decided to abolish some charges on loans. RBI has abolished foreclosure charges or pre-payment penalty on closure of floating rate term loans. Banks or NBFCs will not be able to charge penalty or closure charge from loan taking customers on closing floating rate loans.
Giving information about the decisions taken in the RBI's monetary policy meeting, Governor Shaktikanta Das said that in the last several years, the Reserve Bank has taken several steps to protect the interests of customers. Under this, except for business, banks or NBFCs are not allowed to charge foreclosure charges or pre-payment penalty from the individuals category who take floating rate term loans on closing the loan. That is, now banks or NBFCs will not be able to charge foreclosure charges from customers on such loans. RBI Governor said that now it has been decided to extend this gridline further. These gridlines will also be effective on loans given to micro and small enterprises. That is, banks and NBFCs will not be able to charge foreclosure charges or pre-payment penalty on floating rate term loans given to micro and small enterprises in the coming days. Soon a draft circular will be issued for public consultation in this direction.
Banks decide the interest rates of loans in two ways. One is a floating rate loan and the other is a fixed rate loan. Floating rate loan is based on benchmark rate. You can understand it like this that whenever RBI changes its policy rates i.e. repo rate, then the banks also increase the interest rates on floating rate loans. And if RBI cuts, then the banks reduce the interest rates on the loan. But the interest rates of fixed rate loans are fixed. The interest rates fixed at the time of taking the loan remain the same till the loan is over.
