Notification on Fair Lending Practice – Penal charges in Loan accounts (dated 18/08/2023) – RBI
View Pdf– Notification on Fair Lending Practice – Penal charges in Loan accounts (dated 18/08/2023) – RBI.
- Certain instructions are issued for adoption for charging the penal interest/charges on loans like (1) Penalty, if charged, for non-compliance of material terms and conditions of loan contract by the borrower shall be treated as ‘penal charges’ and shall not be levied in the form of ‘penal interest’ that is added to the rate of interest charged on the advances. (2) The penal charges in case of loans sanctioned to ‘individual borrowers, for purposes other than businesses, shall not be higher than the penal charges applicable to non-individual borrowers for similar non-compliance of material terms and conditions etc. Please refer notification for more details.
