The Reserve Bank of India (RBI) has issued guidelines for resetting interest rates on floating interest loans, aiming to provide greater transparency and options for borrowers. The guidelines require lenders to offer borrowers the choice to switch to a fixed rate during interest rate resets and communicate any potential changes in loan tenure or EMI amounts clearly. Additionally, the RBI has released rules to curb the practice of banks and NBFCs using penal interest charges for revenue enhancement. Effective January 1, 2024, lenders will only be allowed to impose “reasonable” penal charges for loan repayment defaults.
‘Give fixed-rate house loan choices,’ says the RBI to banks and other lenders
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