RBI Bans Foreclosure Fees on Most Floating-Rate Loans: Effective Jan 2026

 The Reserve Bank of India's new circular takes effect from January 1, 2026, mandating that most floating-rate loans for individuals and micro or small businesses cannot have foreclosure or pre-payment penalties. This rule covers home loans, car loans, education loans, and business loans up to ₹50 lakh from banks, NBFCs, and co-operative banks. Fixed-rate loans, foreign currency borrowings, and large corporate loans remain excluded, and certain business loans above prescribed thresholds may still attract charges if given by specified lenders. At Ayaan Finserve India, foreclosure fees were already waived as a customer-friendly policy, ensuring borrowers can repay early without penalties. The RBI’s update makes this the standard for the industry, giving borrowers greater flexibility and protection against hidden charges. Learn more!

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