RBI proposes standardized APR to make loan costs transparent
The Reserve Bank of India has proposed new rules aimed at implementation by 1 April 2027 to make it easier for you to understand exactly what you're paying when you take a loan.
Lenders will have to show a standard annual percentage rate (APR) on regulated loans, and RBI has proposed a board-approved ceiling on APR for personal loans up to ₹50,000, so no more surprise high charges.
RBI freezes spreads, quarterly resets required
Banks and NBFCs can't tweak most parts of your loan's interest spread for three years, unless your credit risk changes, and even then, they'll need to review your profile carefully.
For floating-rate loans, rates must be updated at least every three months (except at small rural and urban cooperative banks and Base Layer NBFCs), making it easier to keep track of what you owe.
As Finbox CEO and co-founder Rajat Deshpande puts it, these steps finally let people "Breaking the spread into named components, such as credit risk premium, operating cost, term premium, business strategy premium, makes comparing that of banks and NBFCs, possible for the first time," bringing much-needed transparency.