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ARTICLE · 08 JULY 2025

RBI Prepayment Charges Guidelines 2025: What Indian Lenders Must Know

AK & Partners
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The Reserve Bank of India (RBI) has issued the Prepayment Charges on Loans Directions, 2025 on July 2, 2025.

IndiaFinance and Banking
Anuroop Omkar
Anuroop Omkar

The Reserve Bank of India (RBI) has issued the Prepayment Charges on Loans Directions, 2025 on July 2, 2025. These will come into effect for all loans sanctioned or renewed on or after January 1, 2026. The objective is to standardise the levy of prepayment or foreclosure charges on loans and advances across banks and NBFCs in India.

Applicability

These directions apply to Commercial Banks (but excluding Payments Banks), all Non-Banking Financial Companies (NBFCs) (including Middle Layer and Upper Layer NBFCs), Cooperative Banks (including Urban and Rural) and All India Financial Institutions (AIFIs).

These guidelines apply irrespective of the source of funds used for prepayment (borrower's own funds or takeover by another lender).

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