RBI to stop banks from capitalising penal charges on bank loans defaults - Shahpur Turk CSC - Common Service Centre in Sonipat RBI to stop banks from capitalising penal charges on bank loans defaults

15 April 2023

RBI to stop banks from capitalising penal charges on bank loans defaults

The Reserve Bank of India (RBI) has rebuked banks for overcharging borrowers under the pretence of penal interest rates and has proposed measures to shield borrowers from unfair charges. The regulator stated in a drafted circular on levying penal charges on loan accounts that the penalty should be levied as a charge rather than as a compounding interest rate.

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