Reserve Bank of India (Pre-payment Charges on Loans) Directions, 2025 Latest News
The RBI recently announced Reserve Bank of India (Pre-payment Charges on Loans) Directions, 2025, prohibiting banks and other regulated lenders from charging prepayment penalties on floating-rate loans availed by individuals for non-business purposes.
About Reserve Bank of India (Pre-payment Charges on Loans) Directions, 2025
- It prohibited banks and other regulated lenders from charging prepayment penalties on floating-rate loans availed by individuals for non-business purposes.
- It benefits borrowers of home loans and other floating-rate loans, allowing them to repay loans ahead of schedule without additional fees.
- These new rules will be enforced on all loans which are sanctioned or renewed on or after January 1, 2026.
- The directive will apply to commercial banks and regulated entities (REs) such as NBFCs, excluding specific banks like Small Finance Banks and Regional Rural Banks unless they issue loans up to Rs 50 lakh.
- The exemption applies regardless of whether the loan is repaid fully or partially, the source of funds, or the presence of co-obligants.
- It also includes dual and special rate loans if they are on a floating rate at the time of repayment.
- No minimum lock-in period is required.
- For loans not covered under this rule, lenders must disclose any prepayment charges in the sanction letter, loan agreement, and Key Facts Statement.
- Should a bank fail to include this information, it cannot levy any prepayment charge.
Source: LMINT
Last updated on January, 2026
→ Check out the latest UPSC Syllabus 2026 here.
→ Join Vajiram & Ravi’s Interview Guidance Programme for expert help to crack your final UPSC stage.
→ UPSC Mains Result 2025 is now out.
→ UPSC Notification 2026 is scheduled to be released on January 14, 2026.
→ UPSC Calendar 2026 has been released.
→ UPSC Prelims 2026 will be conducted on 24th May, 2026 & UPSC Mains 2026 will be conducted on 21st August 2026.
→ The UPSC Selection Process is of 3 stages-Prelims, Mains and Interview.
→ Prepare effectively with Vajiram & Ravi’s UPSC Prelims Test Series 2026 featuring full-length mock tests, detailed solutions, and performance analysis.
→ Enroll in Vajiram & Ravi’s UPSC Mains Test Series 2026 for structured answer writing practice, expert evaluation, and exam-oriented feedback.
→ Join Vajiram & Ravi’s Best UPSC Mentorship Program for personalized guidance, strategy planning, and one-to-one support from experienced mentors.
→ UPSC Result 2024 is released with latest UPSC Marksheet 2024. Check Now!
→ UPSC Toppers List 2024 is released now. Shakti Dubey is UPSC AIR 1 2024 Topper.
→ Also check Best UPSC Coaching in India
Reserve Bank of India (Pre-payment Charges on Loans) Directions, 2025 FAQs
Q1. The RBI's 2025 (Pre-payment Charges on Loans) Directions, 2025, prohibit prepayment penalties on which type of loans?+
Q2. From which date will the new RBI directions on prepayment charges be enforced?+
Q3. What happens if a lender does not disclose prepayment charges in the sanction letter or loan documents?+
Tags: prelims pointers Reserve Bank of India (Pre-payment Charges on Loans) directions upsc current affairs upsc prelims current affairs
