look news india
News India Live, Digital Desk: New Regulations: If you have taken a loan from a bank or a financial institution, or you are thinking of taking it in future, then this news is very important for you! The Reserve Bank of India (RBI) has recently made some major and important changes in the rules related to the loan, which will directly affect the pockets and ways of taking crores of people.
These new rules will not only give customers better transparency related to loan, but will also protect their rights. Let’s know what are the 3 big changes that RBI has done and how can they change your loan related life:
1. Big change on Floating Interest Rate Loan (EMI fluctuations):
, Old Testament: Till now in loans with floating interest rates, when the interest rate increased, the banks kept the amount of EMI and only extended the loan duration, which the customers could not get late or completely. The loan was pulled very long and people did not even know.
, New rule: Now RBI has said that whenever the interest rate increases or decreases, the bank will have to give these 3 options immediately:
, Increase EMI amount: Increase your EMI, but the loan duration remains the same.
, Extend the duration: Increase the loan duration, but EMI remains the same (this will be the option, it will not be imposed).
, Reduce both of them: Adjustment in both EMI and duration.
, You will get a direct answer: The bank will have to clearly tell you how many installments of EMI are increasing or decreasing. With this you will be able to take a decision on time and know when your loan will end.
, Effect: This change will increase transparency and will give customers the power to control loan.
2. Strictness for Penal Interest (penalty will now be only ordinary):
, Old Testament: Many banks and financial institutions also used to invest on Penal Interest on default, which used to be called ‘Interest on Penal Interest’ or ‘Penal Compound Interest’. It was very heavy on customers.
, New rule: RBI has clarified that Now ‘compound interest’ will not be found on Penal Interest. This means that now the default will be imposed only interest according to the ‘simple interest’, which will reduce the financial burden on the customers.
, Effect: Customers will get relief from additional burden. This rule will now apply to all new and renewed loans.
3. Loan Closing Statement has to be given (transparency):
, New rule: Now while repaying the loan, banks or lenders will have to give a complete ‘loan closing statement’ within a fixed time (eg, 3 days or a week before the loan closure). It will be told how much dues, which charge are charged, and when will the loan be closed.
, Effect: This will give the customer complete accounting and will avoid any dispute in future.
The purpose of these rules is to create a better environment for people taking loans and to protect them from immoral bank practices. This is a major step for RBI to protect customers’ interests. So, keep checking your loan EMI and know your rights!