No More Prepayment Charges on These Loans: RBI Announces New Rule from January 2026 New Delhi: The Reserve Bank of India (RBI) has taken a major step to provide relief to millions of borrowers. As per the latest circular issued by RBI, banks and Non-Banking Financial Companies (NBFCs) will no longer be allowed to levy prepayment charges on floating-rate loans and advances. This new rule will come into effect from January 1, 2026. What is the New Rule? According to the RBI circular, if an individual or small business has taken a floating-rate loan, they will be able to repay it early without paying any additional prepayment charges. This rule will apply to home loans, personal loans, business loans, and other non-commercial loans. Who Will Benefit? This decision will benefit millions of small traders and individual borrowers directly. Earlier, banks and NBFCs charged heavy prepayment penalties for early loan closure. With this rule, borrowers will save significantly. Official Statement by RBI The RBI stated: “This step has been taken to protect customer interests and ensure transparency in the financial sector. Floating-rate loan customers should have the freedom to repay early without any extra burden.” Public Reaction Rajesh Agarwal, a small trader from Delhi, said: “This is a great move. Earlier, prepaying a loan would cost an extra 2-3%. Now, this will help us save money.” Why Was This Decision Taken? Market experts believe this decision will empower borrowers and promote financial freedom. It will also increase competition among banks and NBFCs, ultimately improving customer service. When Will It Be Effective? The rule will be implemented nationwide from January 1, 2026. RBI has instructed all banks and NBFCs to update their policies accordingly. Conclusion This decision by RBI is a significant move toward strengthening consumer rights. In the coming time, this rule will be a big relief for loan borrowers across India.

No More Prepayment Charges on These Loans: RBI Announces New Rule from January 2026