Reserve bank of India loan rules: If you take a loan after October 1, you will get the loan under the new rules, but these rules are changing only on certain types of loans.
New Loan Rules: If you are also planning to take a loan in the coming days, then there is going to be a change in the rules from RBI. If you take a loan after October 1, you will get the loan under the new rules, but these rules are changing only on certain types of loans. Information regarding this has been given by the Reserve Bank. The Reserve Bank of India (RBI) said that the rules for retail and MSME loans to banks and NBFCs are changing from October 1.
RBI has said that from October, the borrower will have to provide all the information (KFS) about the loan agreement including interest and other costs. At this time, it has been made mandatory to provide all the information regarding loan agreements given by commercial banks especially to individual borrowers, digital loans of units coming under the purview of RBI and small amount loans.
RBI issued statement
RBI said in the statement that it has been decided to harmonize the instructions on KFS for loans. The central bank has said that this decision has been taken to increase transparency regarding the products of all financial institutions coming under the purview of RBI and to provide complete information about loans to the customers. With this, the borrower will be able to take financial decisions thoughtfully.
Implement new rules as soon as possible
This instruction will be applicable in the cases of retail and MSME term loans given by all the entities (RE) coming under the regulation of RBI. KFS is a description of the main facts of the loan agreement in simple language. This will provide correct information to the loan takers. The central bank has said that financial institutions will take necessary measures to implement the guidelines as soon as possible.
Rules will change from October 1
The guidelines are mandatory for all new retail and MSME term loans sanctioned on or after October 1, 2024. This also includes new loans given to existing customers. RBI said that amounts like insurance and legal fees collected from institutions taking loans by institutions under the purview of the central bank on actual basis on behalf of third party service providers will also be part of the Annual Percentage Rate (APR).
No charge will be taken without the consent of the borrower
This should be disclosed separately. Wherever the RE is involved in recovery of such charges, receipts and related documents will be provided to the borrowers for each payment within a reasonable time. Further, any charges which are not mentioned in the KFS cannot be charged at any stage during the tenure of the loan without the express consent of the borrower. However, in case of credit cards, the provisions regarding amount received have been exempted.
