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Mumbai: The Reserve Bank on Friday granted three more months up till April 1, 2024 to banks and NBFCs to implement the modified norms for levying penal charges in loan accounts, as part of fair lending practice. In August, the central bank issued a circular on ‘Fair Lending Practice - Penal Charges in Loan Accounts’ and it was to come into effect from January 1, 2024.
“However, considering that certain clarifications and additional time has been sought by some regulated entities (REs) to reconfigure their internal systems and operationalize the circular, it has been decided to extend the timeline for implementation of the instructions by three months,” the RBI said.
Accordingly, regulated entities, which include banks and NBFCs, have been asked to ensure that the instructions are implemented in respect of all the fresh loans availed from April 1, 2024 onwards. In the case of existing loans, the RBI said the switchover to new penal charges regime should be ensured on the next review/ renewal date falling on or after April 1, 2024, but not later than June 30, 2024.
