Revised norms on fair lending practice effective from April 1 - RBI
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The revised fair lending practice, which prohibits banks and NBFCs from using penal charges on loan defaults as a revenue enhancement tool, will come into effect from April 1, the Reserve Bank said on Monday.
Concerned over the practice of banks and non-banking financial companies (NBFCs) using penal interest as a revenue enhancement tool, the RBI on August 18 last year had modified norms, under which lenders would be able to levy only "reasonable" penal charges in case of default in repayment of loans.
Banks, NBFCs, and other entities regulated by the RBI were given an extension of three months till April to implement the revised norms.
Concerned over the practice of banks and non-banking financial companies (NBFCs) using penal interest as a revenue enhancement tool, the RBI on August 18 last year had modified norms, under which lenders would be able to levy only "reasonable" penal charges in case of default in repayment of loans.
Banks, NBFCs, and other entities regulated by the RBI were given an extension of three months till April to implement the revised norms.
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