RBI Eases Borrowing Rules, Allows Retail Borrowers to Switch Between Fixed and Floating Rates

In the wake of rising interest rates, RBI said it had received several grievances from consumers related to the elongation of loan tenor and or increase in EMI amount, without proper communication with and or consent of the borrowers.

“In order to address these concerns, the REs are advised to put in place an appropriate policy framework meeting the following requirements for implementation and compliance,” RBI said.

As a part of the new rules, the central bank said:

At the time of sanction, regulated entities shall clearly communicate to the borrowers about the possible impact of change in benchmark interest rate on the loan leading to changes in EMI and/or tenor or both. Subsequently, any increase in the EMI or tenor or both on account of the above shall be communicated to the borrower immediately through appropriate channels.