RBI halts foreclosure fees on small borrower loans
Starting January 1, 2026, the RBI will stop banks and lenders from charging penalties if you want to pay off your floating rate loan early.
This move is meant to make things fairer and more flexible for borrowers, especially individuals and small businesses taking out new or renewed loans after this date.
Which lenders are covered?
The rule covers most big banks, top urban co-op banks, major NBFCs, and national financial institutions.
Smaller banks—like small finance or rural ones—are only included if your loan is under ₹50 lakh.
What this means for you
If you ever want to clear your loan ahead of schedule, you won't get hit with extra fees anymore.
This gives you more freedom with your money and could make switching lenders easier.
Lenders might start pushing fixed-rate loans instead (where these charges still exist), so it's worth keeping an eye on what kind of loan you're signing up for.