NEW DELHI : Micro and Small Enterprises (MSEs) will now be able to prepay loans without paying foreclosure penalty. Banks and NBFCs are not permitted to levy foreclosure charges or prepayment penalties on any floating rate term loan sanctioned to individual borrowers for non-business purposes. RBI has is now proposed to broaden the scope of these guidelines to include loans to micro and small enterprises.

“With a view to safeguard customers’ interest through better transparency and customer centricity by lenders, it has been decided to broaden the scope of such regulations to cover loans . . .