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ARTICLE · 15 JANUARY 2025

FAQs On RBI Circular: Resetting Floating Interest Rates For EMI-Based Personal Loans

IndiaLaw LLP
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The Reserve Bank of India (RBI) had issued a circular titled "FAQs on the RBI Circular: Reset of Floating Interest Rate on Equated Monthly Instalments (EMI) Based Personal Loans"...

IndiaFinance and Banking
Rahul Sundaram
Rahul Sundaram

The Reserve Bank of India (RBI) had issued a circular titled “FAQs on the RBI Circular: Reset of Floating Interest Rate on Equated Monthly Instalments (EMI) Based Personal Loans” on January 10, 2025, aimed at addressing concerns related to floating interest rate resets on personal loans. This circular, originally effective from August 18, 2023, seeks to ensure transparency, enhance borrower awareness, and provide flexible options to manage interest rate changes.

Table of Contents

  • Scope and Purpose
  • Key Takeaways from the FAQs
  • Conclusion

Scope and Purpose

The circular applies exclusively to personal loans repaid through equated periodic instalments (EMIs). It does not cover other loan categories like home loans or business loans. By clearly outlining communication protocols and borrower rights, the RBI aims to safeguard consumers in an era of fluctuating interest rates.

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