Pre-payment fee waiver for loans to MSEs likely

MUMBAI: In a relief to Micro and Small Enterprises (MSEs) and individual borrowers, RBI has said that it plans to waive pre-payment charges on floating rate loans up to an aggregate sanctioned limit of Rs 7.5 crore per borrower.

RBI has said that instructions shall be applicable irrespective of the source of funds used for foreclosure or pre-payment of loans, whether partial or in full. Also, the applicability of the instructions for dual or special rate loans will depend whether the loan is on fixed or floating rate at the time of foreclosure or pre-payment.

The norms will not apply to Tier 1 and Tier 2 Primary (Urban) Co-operative Banks and Base Layer NBFCs. Base Layer NBFCs primarily consist of non-deposit-taking NBFCs with total assets below Rs 1,000 crore.