RBI Governor Proposes To Exclude Micro and Small Enterprises From Foreclosure Charges

New Delhi, Oct 9 (KNN) Announcing the Monetary policy in Mumbai today RBI Governor Shaktikanta Das has hinted at dropping the policy of foreclosure charges against MSEs being used by Banks.

Speaking about Responsible Lending Conduct – Levy of Foreclosure Charges/ Pre-payment Penalties on Loans, RBI Governor proposed to club loans to Micro and Small enterprises with individuals which do not attract foreclosure charges. 

“The Reserve Bank has taken several measures over the years to safeguard consumer’s interest. As part of these measures, Banks and NBFCs are not permitted to levy foreclosure charges/ pre-payment penalties on any floating rate term loan sanctioned to individual borrowers for purposes, other than business. It is now proposed to broaden the scope of these guidelines to include loans to Micro and Small Enterprises (MSEs). A draft circular in this regard shall be issued for public consultation”, Governor said.

Industry bodies have responded positively.

Federation of Indian Micro and Small & Medium Enterprises (FISME), which has raised the issue very strongly over last few years, has welcomed the move.

“We welcome RBI Governor’s announcement that it is proposed to do away with foreclosure charges for Micro and Small Enterprises (MSEs) also. However, we could not understand why even this proposed policy is being put for public discussion. RBI should have issued the circular right away” says FISME communique.

(KNN Bureau)