The Live Ahmedabad
  • Home
  • Ahd City
  • Business
  • Entertainment
  • Education
  • Crime
  • Health
  • Politics
  • Sports
  • Featured

The Live Ahmedabad

  • Home
  • Ahd City
  • Business
  • Entertainment
  • Education
  • Crime
  • Health
  • Politics
  • Sports
  • Featured
Nation

Banks Cannot Levy Penal Interest On Erring Customers, Says RBI

by TLAteam August 18, 2023August 18, 2023
written by TLAteam August 18, 2023August 18, 2023
Banks Cannot Levy Penal Interest On Erring Customers, Says RBI

Reserve Bank issued guidelines to banks, NBFCs on levying of penal rates of interest on loans. RBI in a circular dated 18th Aug 2023 mentioned that there shall be no capitalisation of penal charges i.e., no further interest computed on such charges.

Business News

After reviewing the practices followed by Banks on charging penal interest/charges, the central Bank issued the guidelines underscoring that Penalty, if charged, for non-compliance of terms and conditions of loan contract by the borrower shall be treated as ‘penal charges’ and shall not be levied in the form of ‘penal interest’ that is added to the rate of interest charged on the advances. However, this will not affect the normal procedures for compounding of interest in the loan account.

RBI clarified that the intent of levying penal interest/charges is essentially to inculcate a sense of credit discipline and are not meant to be used as a revenue enhancement tool.

RBI also said the quantum of penal charges shall be reasonable and in case of loans sanctioned to ‘individual borrowers, for purposes other than business’, shall not be higher than the penal charges applicable to non-individual borrowers.

The quantum and reason for penal charges shall be clearly disclosed by the Banking entities to the customers in the loan agreement.

These instructions shall come into effect from January 1, 2024 and are not applicable to Credit Cards, External Commercial Borrowings, Trade Credits and Structured Obligations.

0 comment
previous post
Major Asked IIT For Lighter Bulletproof Jackets, It Made World’s Lightest
next post
Jio Introduces New Prepaid Plans with Free Netflix

You may also like

Sevagram Ashram Trust announces fellowship for studies in...

July 1, 2025

Cabinet Clears ₹1.07 Lakh Crore for Job Creation,...

July 1, 2025

Air India Delhi-Vienna Flight Drops 900 Feet After...

July 1, 2025

Big Changes From July 1: Aadhaar PAN Link,...

July 1, 2025

Big Changes in Railways: Charts 8 Hours Early,...

June 30, 2025

Himanshi Khurana Shares Throwback Photo, Calls Bigg Boss...

June 28, 2025

‘Kaanta Laga’ Fame Shefali Jariwala Passes Away at...

June 28, 2025

Shikhar Dhawan Opens Up About Personal Life and...

June 27, 2025

CJI BR Gavai Asserts Constitution’s Supremacy Amid Ongoing...

June 27, 2025

Shikhar Dhawan Opens Up About 2006 Australia Tour,...

June 27, 2025

Leave a Comment Cancel Reply

Save my name, email, and website in this browser for the next time I comment.

Business News

Recent Posts

  • Sevagram Ashram Trust announces fellowship for studies in Gandhian Thoughts

    July 1, 2025
  • 4,000 Investors Cheated in ‘Pump-and-Dump’ Scam Run from Ahmedabad; SEBI Launches Probe

    July 1, 2025
  • Ahmedabad Streets in Trouble: Potholes, Waterlogging Hit 13 Areas

    July 1, 2025
  • Fake Doctor Without Medical Degree Arrested by SOG in Changodar

    July 1, 2025
  • Cabinet Clears ₹1.07 Lakh Crore for Job Creation, Major Boost to Employment and R&D by Modi Government

    July 1, 2025
August 2023
MTWTFSS
 123456
78910111213
14151617181920
21222324252627
28293031 
« Jul Sep »
The Live Ahmedabad
Footer Logo
  • Home
  • Ahd City
  • Business
  • Entertainment
  • Education
  • Crime
  • Health
  • Politics
  • Sports
  • Featured
  • Privacy Policy
  • Disclaimer
  • Cookie Policy
  • Terms of use
  • Advertise with Us
  • Work With Us
  • Contact Us

© 2021 - The Live Ahmedabad. All Rights Reserved.