RBI Moves to Protect Borrowers: Banks May Need Your Approval Before Loan Rule Changes
What Happened
RBI has proposed new loan-pricing rules that would require lenders to obtain a borrower's consent before shifting an existing floating-rate loan to a new benchmark. The draft also says the new interest rate cannot be higher than the pre-switch rate, and lenders cannot charge any migration fee.
Key Takeaways
If implemented, the rules could give home, auto, and other floating-rate loan borrowers greater protection against unexpected EMI increases arising solely from benchmark changes. The framework is proposed to take effect from April 1, 2027, with existing loans to be migrated by April 1, 2029 after borrower consent.