CA Sakchi Jain Instagram – Banks cannot charge penal interest in case of missed EMIs.
Let’s understand the difference between penal interest and penal charges first.
When borrowers default or fail to comply, lenders typically impose penalties, which can take the form of fixed charges (penal charges) or additional interest (penal interest).
Penal charges are a set fee, separate from the interest, while penal interest is an extra rate added onto the customer’s existing interest rate. The RBI instructed banks not to include penal charges in the loan amount and not to calculate additional interest on these charges.
The new guidelines apply to all new loans starting from April 1. Existing loans will be subject to the norms starting from June 1, 2024. The RBI postponed the implementation date from January 1 to April 1 to give financial institutions more time to adjust. Both retail and corporate borrowers will face identical penalties for the same loan product
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#PenalInterest #PenalCharges #RBI #Loans #Borrowers #Compliance #Guidelines #FinancialInstitutions #Retail #Corporate #ImplementationDate #Adjustments | Posted on 12/Apr/2024 20:20:47
