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Pre-paying loans will get easier, as RBI abolishes charges for advances on business loans

YourStory

YourStory · 1d ago

Pre-paying loans will get easier, as RBI abolishes charges for advances on business loans

The Reserve Bank of India (RBI) has directed banks and lenders to abolish pre-payment charges on floating-rate loans and advances, including for business purposes, intended for individual borrowers and micro and small enterprises (MSEs). This directive applies to loans sanctioned or renewed after January 1, 2026. The move aims to standardize practices and reduce grievances from MSEs regarding pre-payment charges, enhancing accessible and affordable financing options for them without penalty burdens.

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RBI directs banks, other lenders not to levy pre-payment charges on biz loans to individuals, MSEs

Economic Times

Economic Times · 2d ago

RBI directs banks, other lenders not to levy pre-payment charges on biz loans to individuals, MSEs

The Reserve Bank of India (RBI) has instructed banks and financial entities to eliminate pre-payment penalties on floating-rate loans to individuals and micro, small enterprises. Effective January 1, 2026, this directive aims to align with existing guidelines prohibiting pre-payment charges on non-business loans, fostering accessible financing. The RBI's move followed supervisory findings of inconsistent practices among lenders, causing customer grievances. This applies to loans across numerous banking institutions, excluding certain cooperative and rural banks.

Gold loan risks: RBI exposes irregularities, borrowers beware

Money Control

Money Control · 8m ago

Gold loan risks: RBI exposes irregularities, borrowers beware

- The Reserve Bank of India (RBI) has identified irregularities in granting gold loans, including lack of transparency during auction on default and inadequate due diligence. - The gold loan segment has experienced significant growth, with public sector banks accounting for a majority of the loans in recent years. - Borrowers should conduct research and verification, understand loan terms, and be aware of red flags when availing gold loans. - Essential precautions to take include studying loan offers, comparing interest rates and charges, and being cautious of unsolicited offers with hidden terms. - Lenders have been given three months to review their policies and practices related to gold loans and take corrective measures. Non-compliance may result in supervisory action from the RBI.

Need an advance on your salary this festive season? There are startups for that.

Livemint

Livemint · 10m ago

Need an advance on your salary this festive season? There are startups for that.

Fintech startups in India are anticipating increased demand for salary advances, particularly from gig workers, as the country's festival season approaches. Startups like Refyne, KarmaLife, and SalarySe offer salary advances to employees in partnership with non-banking financial companies. These advances are repaid through installments and typically have interest rates ranging from 18% to 24%. Gig workers make up a significant portion of the borrowers, seeking advances to cover expenses during the festival season. Young employees in white-collar jobs also utilize such loans for personal expenses.

IIFL Finance shares plunge after RBI bars firm from offering gold loans

VCCircle

VCCircle · 1y ago

IIFL Finance shares plunge after RBI bars firm from offering gold loans

Shares of IIFL Finance, an Indian non-banking finance company, dropped 20% after the Reserve Bank of India (RBI) barred the firm from offering gold loans due to "material supervisory concerns" in its portfolio. The RBI found serious deviations in collateral assessment, breaches in loan-to-value ratio limits, and lack of transparency in charges. A prolonged restriction may impact earnings, lower co-lending income and increase cost of finances. IIFL Finance stated that it has been taking corrective action and the impact on financials will depend on the resolution time.

CreditAccess Grameen, Five Star, L&T Finance shares surged up to 15% today; here's why

Business Today

Business Today · 4m ago

CreditAccess Grameen, Five Star, L&T Finance shares surged up to 15% today; here's why

Shares of certain financial companies, including CreditAccess Grameen, Five-Star Business Finance, and L&T Finance, surged up to 15% following the Reserve Bank of India's new notifications. The RBI stated that microfinance loans deemed consumer credit would have a 100% risk weight, and risk weights for NBFCs rated A and above would return to pre-November 2023 levels. These regulatory changes likely boosted investor confidence, contributing to the share price increases.

RBI increases collateral free loan limit for farmers from ₹1.6 lakh to ₹2 lakh

Livemint

Livemint · 7m ago

RBI increases collateral free loan limit for farmers from ₹1.6 lakh to ₹2 lakh

The Reserve Bank of India (RBI) has increased the limit for collateral-free loans for agricultural farmers from ₹1.66 lakh to ₹2 lakh per borrower. This move is expected to provide relief to small and marginal farmers. The collateral-free loans do not require farmers to pledge assets as security. The RBI last revised the limit for these loans in 2019, raising it from ₹1 lakh to ₹1.6 lakh. The Kisan Credit Card (KCC) Scheme, which offers easy credit access for farmers, will also be enhanced through this update.

Jio Financial tweaks plans after RBI move on unsecured lending

Livemint

Livemint · 1y ago

Jio Financial tweaks plans after RBI move on unsecured lending

Jio Financial Services Ltd (JFSL) is shifting its lending strategy to focus on secured loans after the recent RBI restrictions on unsecured consumer loans. The company plans to launch device-as-a-service (DaaS) along with supply chain financing, loan against shares, and home loans. Jio Financial Services has completed testing for consumer durable loans and personal loans, and has filed for conversion from an NBFC to a core investment company (CIC). The move comes as banks and NBFCs are being cautious towards unsecured lending due to rising risks and higher risk weights imposed by RBI.

Flipkart super.money’s First Product Goes Live, Launches Co-Branded Credit Card

Inc42 · 10m ago

Flipkart super.money’s First Product Goes Live, Launches Co-Branded Credit Card

super.money has launched a new credit card called superCard. Users can get credit cards with limits as low as INR 90 by making deposits ranging from INR 100 to INR 10 Lakhs. The card supports regular merchant payments and UPI transactions through super.money’s 'Scan & Pay' feature. Additionally, super.money plans to introduce other financial products, such as fixed deposits (FDs) and instant pre-approved personal loans, in the future.

Early RBI warnings on top-up loans is fair but LAP is the real worry

Money Control

Money Control · 10m ago

Early RBI warnings on top-up loans is fair but LAP is the real worry

The loan against property segment is seeing rapid growth, according to the Reserve Bank of India (RBI). The regulator has issued warnings about top-up loans, urging lenders to monitor their end-use. Small ticket loans against property make up the majority of business loans given by non-banking financial companies (NBFCs). However, signs of stress have emerged in states where loan against property is a popular product.

RBI cautions banks on gold loan disbursals through fintech startups

Economic Times

Economic Times · 1y ago

RBI cautions banks on gold loan disbursals through fintech startups

The Reserve Bank of India (RBI) has issued a warning to banks about gold loans disbursed through fintech startups. The central bank expressed concerns over the evaluation process, particularly when gold is sourced through field agents. Major players like Rupeek, IndiaGold, and Oro Money are involved. The cautionary measures may involve temporary pausing of business to ensure compliance. The RBI's scrutiny follows recent regulatory action on IIFL Finance's gold loan business. Gold loans have seen significant growth, with retail gold loans reaching Rs 1 lakh crore in March 2024.

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