RBI Introduces Major Loan Rule Changes; Borrowers to Get Relief from October 1

New Delhi (The Uttam Hindu): The Reserve Bank of India (RBI) has announced significant changes in loan regulations aimed at providing relief to both individuals and businesses. Three of the new rules will take effect from October 1, 2025, while others are still under consideration.

Under the new guidelines:

Floating rate loans: Banks can reduce EMIs before the three-year lock-in period ends, giving borrowers more flexibility.

Fixed rate loans: Customers will now have the option to switch to a floating rate, enabling them to choose interest rates that best suit their financial situation.

The RBI has also introduced key reforms for gold loans. Previously restricted to jewelers, now small traders and artisans can avail loans against gold. The repayment period for Gold Metal Loans (GML) has been proposed to increase from 180 days to 270 days, and non-manufacturing jewelry sellers can also use the scheme for outsourcing. This step is expected to benefit the MSME and jewelry sectors.

Additionally, RBI has allowed banks to raise funds from offshore markets. Banks can now issue bonds in foreign currency or Indian rupees, strengthening their financial position and enabling them to extend more loans. The new rules will also apply to foreign bank branches operating in India for large loans and inter-group transactions, reducing associated risks.

For credit reporting, banks and financial institutions are now required to submit data to credit bureaus weekly instead of bi-weekly. This will help in timely correction of errors in credit reports. The inclusion of the CKYC number in reports will further simplify identification processes.

These measures collectively aim to provide greater flexibility, better credit access, and risk management for borrowers and banks alike.