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RBI: Now you are completely free from the trap of pre-payment charges. If you want to repay your business loan ahead of time, you can do so without any additional charge. The RBI (Reserve Bank of India) has taken a big decision, which states that if the floating rate loan is repaid before January 1, 2026, then companies can no longer charge pre-payment charges.

All commercial banks, financial institutions, and NBFCs will follow this rule of the RBI.

Why did the RBI take this decision?

The Reserve Bank of India (RBI) has banned lending institutions from charging arbitrary pre-payment charges. Earlier, these charges were causing confusion and financial burden for the customers, and some companies were imposing such rules, due to which customers were not able to take loans at a lower interest rate from other institutions. With this new rule, now businessmen will be able to easily switch to low-interest loans, which will give them great relief.

Who will get the benefit?

All the businessmen who have taken loans will get the benefit of this. Now, along with MSME, small traders will also not have to pay a pre-payment charge. This step is expected to make loans cheaper for traders, which will give them financial relief.

Who can charge a pre-payment charge?

RBI has clarified that banks and financial institutions can charge pre-payment charge only when it is clearly written in the loan agreement. If there is no provision in the agreement, then they cannot charge these fees. This will make the situation of customers clear for doing business.

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