RBI Update: Big relief from RBI, now you will not have to pay penalty on pre-payment of business loan..

The Reserve Bank of India (RBI) has taken an important decision giving great relief to the borrowers. Under the new rule, banks and financial institutions will not be able to charge any pre-payment or foreclosure charge on floating rate loans (a loan whose interest rate keeps changing over time). This rule will apply to both personal and business loans, especially for micro and small enterprises (MSEs).

When will this rule be implemented?

This new rule will apply to all loans that will be approved or renewed on or after January 1, 2026. Till now, this exemption was available only to those people who used to take loans for personal reasons. But now, the RBI has expanded its scope to include business loans as well, which will provide relief to small businessmen.

RBI said in its circular that it is necessary to provide easy, transparent, and affordable financing to small businesses in the country. It has been seen in many places that banks and NBFCs follow different rules, which leads to disputes between customers. That is why the whole system has been made uniform.

Who will benefit?

According to the new rule, large commercial banks, top-layer NBFCs, All India Financial Institutions, and Urban Cooperative Banks will no longer have to charge any kind of pre-payment charge from MSEs and individual businessmen. Small banks and NBFCs will also not charge any non-business loan up to Rs 50 lakh.

Also, whether the customer repays the loan with their own money or from any other funding, there will be no charge. There will also be no lock-in period. Apart from this, these rules will also apply to cash credit and overdraft accounts, provided that the customer closes the account by giving timely information.

Help will also be available from the government. To provide easy loans to small entrepreneurs, SIDBI i.e., Small Industries Development Bank of India, will help in cheap loans and research funding.

At present, many MSE companies, including more than 600 drone and technology startups are active in India. In such a situation, this step will make small businessmen financially stronger and will also make the process of repaying the loan easier.