The Reserve Bank of India, or RBI, advised banks to offer fixed interest rate alternatives to certain borrowers yesterday and instructed the lenders to impose only fair penalty fees in the event of EMI payment default. Due to growing interest rates and the fact that the majority of retail loans currently have floating rates, the two rulings are anticipated to give relief to the borrowers. In order to reset EMIs for personal loans with variable interest rates, the RBI has released rules that permit borrowers to transfer to fixed rates in accordance with bank board-approved procedures.
The banking regulator stated in a statement that all current borrowers must get a notification outlining their alternatives through the proper channels. According to the RBI, personal loan regulations must be put into effect by banks and other lenders by December 31, 2023.