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Penal Charges on Loans: The banking sector regulator RBI has decided to crack down on heavy fines imposed by banks or NBFCs for consumers not being able to pay loan EMIs in a month. RBI is going to fix the limit on the amount of penalty charge to be imposed by the banks. RBI said that the penalty imposed by banks or NBFCs cannot be a source of income.
Penalty charge is not transparent
Announcing the monetary policy, RBI Governor Shaktikanta Das said that at present, banks and other regulated financial institutions have a policy of imposing penalties for non-payment of loans. But these institutions adopt different policies regarding penalty, in which it has been found many times that this penalty charge is very high. In such a situation, RBI will issue guidelines for taking suggestions from the stakeholders for increasing transparency in the matter of charging penalty, limiting it and imposing penalty charge to protect the interests of the consumers.
Cap on penalty charge
RBI said that it has now been decided that the penalty charge for delay or default in loan repayment will be limited and transparent. And it cannot be charged as penalty interest rate on the interest rates charged on the loan. Penalty charge will be recovered separately and cannot be added to the outstanding principal amount.
Banks – NBFC’s arbitrariness will end
At present, banks and NBFCs have the right to charge interest on the loan as a penalty for non-repayment or delay in paying any EMI. Its purpose is to exercise discipline in the payment of EMI among the borrowers. But banks and other financial institutions started charging penalty charges arbitrarily, due to which huge anger is seen among the consumers and whose customers have been continuously complaining to the regulator. After which RBI has decided to make rules regarding this.
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