RBI: If you want to close the loan before time, then this news is for you. RBI has proposed to remove the pre-payment charge levied on business loans of individuals and micro and small enterprises (MSEs).
RBI: The Reserve Bank of India (RBI) is going to give a big gift to the customers who close the loan before time. Actually, RBI has proposed to remove the pre-payment charge levied on business loans of individuals and micro and small enterprises (MSEs). RBI’s draft circular said, “Tier-1 and Tier-2 cooperative banks and units falling under its purview other than early stage NBFCs will not levy any fee/penalty on pre-payment of floating rate loans taken by individuals and MSE borrowers for business purpose. ”
However, in the case of medium enterprises, these instructions will be applicable up to the total approved limit of Rs 7.50 crore per borrower. Let us tell you that as per the existing norms, certain categories of regulated entities (RE) are not allowed to levy pre-payment charges on floating rate tenure loans sanctioned by personal borrowers for purposes other than business.
Decline in bank loans and bank deposits
Meanwhile, the RBI has reported that bank loans and bank deposits declined on a quarterly basis during October-December. Annual bank loan growth declined from 12.6 per cent in the September 2024 quarter to 11.8 per cent in the December 2024 quarter. Similarly, deposit growth declined to 11 per cent from 11.7 per cent. Personal loans, which are a major part of the total loan, grew annually at 13.7 per cent (15.2 per cent a quarter ago).
Increase in business loans
On the other hand, bank loans for trade, finance and professional/other services grew rapidly in the third quarter of 2024-25. The data showed that loans to public sector organisations grew at a rate of 5.4 per cent in December 2024, as against a growth of 0.3 per cent in the previous quarter. The RBI said that the bank charged interest rates ranging from eight per cent to 10 per cent on more than half of the loan amount. About 16 per cent of the loans were at an interest rate of less than eight per cent. The rest of the loans were given at an interest rate of 10 per cent or more.
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