Mumbai:The Reserve Bank on Friday asked banks to provide fixed interest rate option to individual borrowers and directed the lenders to levy only reasonable penalty charges in case of default in EMI payments.
The two decisions are expected to provide a relief to the borrowers amid rising interest rates and most of the retail loans being on floating rates now.
In a directive to banks and NBFCs, including housing finance companies, the Reserve Bank of India (RBI) said that several consumer grievances have been received in relation to elongation of loan tenor or increase in EMI amount with regard to EMI-based floating rate personal loans, without proper communication or consent of the borrowers.