RBI has barred banks and NBFCs from charging pre-payment penalties on floating-rate business loans

The Reserve Bank of India (RBI) has barred banks and non-banking finance companies (NBFCs) from slapping pre-payment charges on most floating rate loans to individuals and micro and small enterprises (MSEs) to improve credit portability and borrower convenience. The new norms will apply to all fresh loans sanctioned or renewed on or after January 1, 2026.