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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 · 2m 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.

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

YourStory

YourStory · 2m 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.

Gold loan risks: RBI exposes irregularities, borrowers beware

Money Control

Money Control · 11m 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.

RBI directs NPCI to certify 4-5 banks for Paytm UPI migration

Inshorts · 1y ago

RBI directs NPCI to certify 4-5 banks for Paytm UPI migration

The RBI has advised National Payments Corporation of India (NPCI) to consider the request of Paytm parent One97 Communication to become a Third-Party Application Provider for UPI transactions. For the seamless migration of the '@paytm' handle to other banks, NPCI may facilitate the certification of 4-5 banks as Payment Service Provider banks to process high-volume UPI transactions.

Surge in tiny personal loans sparks Indian central bank concern

Reuters · 1y ago

Surge in tiny personal loans sparks Indian central bank concern

India's central bank has expressed concerns over the surge in borrowing by low-income consumers for small personal loans. The Reserve Bank of India (RBI) seeks to tighten controls and implement stricter measures to prevent defaults. Delinquency rates for loans under INR 50,000 are significantly higher than the overall retail loan ratio, leading to worries about potential risks for borrowers. The rise in small loans has outpaced overall bank credit growth, prompting the RBI to monitor certain categories of personal loans. Non-bank financial companies are the largest lenders to this segment, with the possibility of exposure for banks as well.

UPI transactions rebound in July after June dip - The Economic Times

Economic Times

Economic Times · 1m ago

UPI transactions rebound in July after June dip - The Economic Times

In July, UPI transactions in India increased in both volume and value, recovering from a dip in June, as reported by the National Payments Corporation of India. The platform processed 19.47 billion transactions worth Rs 25.08 lakh crore. The rise occurs amid discussions on processing costs, with banks starting to levy charges due to reduced government incentives. Other digital payment systems, except Fastag, also saw growth. Discussions on UPI's long-term sustainability and financial viability continue.

Paytm Tentative Timeline To Restart Loan Sanctioning Ends On Feb 14

OutlookIndia

OutlookIndia · 1y ago

Paytm Tentative Timeline To Restart Loan Sanctioning Ends On Feb 14

Fintech firm Paytm's timeline to resolve operational challenges and restart sanctioning new loans is set to end on February 14. Paytm, affected by RBI restrictions on Paytm Payments Bank Limited (PPBL), plans to resolve the challenges before returning to normal operations. It needs to migrate repayments linked to PPBL to other banks to avoid disruption. In the last quarter of 2023, Paytm distributed loans worth Rs 15,535 crore to merchants, individuals, and through postpaid loans.

Banks are fast warming up to UPI credit line for small value loans - The Economic Times

Economic Times

Economic Times · 22d ago

Banks are fast warming up to UPI credit line for small value loans - The Economic Times

Banks are exploring the launch of small-value credit lines via UPI apps like PhonePe and Paytm, targeting new-to-bank customers for loans. After clarification from the RBI, banks like ICICI and Karnataka Bank are conducting early tests on this product, potentially boosting UPI transaction volumes. Though not widely adopted yet, the initiative could introduce new use cases on UPI. Concerns remain about managing defaults, despite its potential to drive digital payment growth.

Wall Street banks resurge in second-lien loan market amid high demand

Economic Times

Economic Times · 2m ago

Wall Street banks resurge in second-lien loan market amid high demand

Wall Street banks are re-entering the market for second-lien loans—considered riskier corporate debt—due to growing demand from private credit firms and conventional investors. These loans, typically priced higher than first-lien loans, now attract enough interest to offer competitive interest rates. Banks profit from syndicating these loans, which were previously dominated by direct lenders, helping reduce borrowing costs for issuers. Recent transactions have seen strong demand, indicating robust investor interest in riskier debt.

Instamojo pulls the plug on payment biz

Entrackr

Entrackr · 1y ago

Instamojo pulls the plug on payment biz

Instamojo, an Indian payment aggregator, has discontinued its payments business after its license application was rejected by the Reserve Bank of India (RBI). The RBI cited Instamojo's failure to meet eligibility criteria for the rejection. The company has now partnered with licensed payment aggregators for its aggregator and payouts function. It plans to reapply for the license in the next financial year. Despite the shutdown of its payments business, Instamojo aims to remain profitable in FY24 through its transition to a full-stack commerce enabling platform for D2C businesses.

Payment banks seek 10% reduction in statutory liquidity ratio, nod to lend

Economic Times

Economic Times · 1m ago

Payment banks seek 10% reduction in statutory liquidity ratio, nod to lend

Payment banks in India are seeking regulatory changes from the Reserve Bank of India (RBI) to enhance their operational flexibility. They have requested a reduction in the statutory liquidity ratio (SLR) from 75% to improve margins through higher-yielding investments. Additionally, they seek approval to offer loans and raise the deposit limit from ₹2 lakh to ₹5 lakh. These measures aim to improve financial operations and competitiveness within the banking sector.

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