Penal Charges Rule: Deadline Extended to April 1, 2024
No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2023-24/102 · issued 29 Dec 2023 · ~2 min read
Quick answerRBI has extended the deadline for implementing new penal charges rules on loan accounts by three months. Fresh loans from April 1, 2024, and existing loans by their next review/renewal date after that, but no later than June 30, 2024, must comply.
What changed
The original implementation date of January 1, 2024, for the fair lending penal charges circular has been pushed back by three months. Fresh loans must now follow the new rules from April 1, 2024, while existing loans must switch over by their next review or renewal date on or after April 1, 2024, but not beyond June 30, 2024. RBI also promised to release FAQs soon to address clarifications sought by regulated entities.
What it means for you
Banks and lenders get extra time to reconfigure systems and operationalize the new penal charges framework, reducing compliance pressure. However, the hard deadline of June 30, 2024, for existing loans means no further delays will be tolerated. This extension signals RBI's willingness to accommodate industry feedback but also its firm intent to enforce fair lending practices.
Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.
What banks were required to do at the time
Update loan origination and servicing systems to apply new penal charges on all fresh loans from April 1, 2024.
Identify existing loans and schedule their next review or renewal date to ensure switchover by June 30, 2024.
Prepare internal communications and training for staff on the revised timeline and penal charge rules.
Monitor RBI website for the upcoming FAQs to address any implementation ambiguities.
Who it affects
All Commercial Banks including Small Finance Banks, Local Area Banks, and Regional Rural Banks, All Primary (Urban) Co-operative Banks, All NBFCs including HFCs, All India Financial Institutions (EXIM Bank, NABARD, NHB, SIDBI, NaBFID)
❓ Common questions
Regulatory timeline
Decoded by BankPulse2026-06-18 04:01 IST
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn03 Aug 2026, 04:00 IST
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
What is the new deadline for implementing penal charges on fresh loans?
Fresh loans availed from April 1, 2024, onwards must comply with the new penal charges rules.
When must existing loans switch to the new penal charges regime?
Existing loans must switch on their next review or renewal date falling on or after April 1, 2024, but no later than June 30, 2024.
Will RBI provide further guidance on this circular?
Yes, RBI stated that a set of FAQs will be uploaded on its website shortly to clarify implementation issues.
📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
Repealed byRBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
RBI’s words: “Official withdrawal register entry #149: DoR.MCS.REC.61/01.01.001/2023-24 — "Fair Lending Practice - Penal Charges in Loan Accounts : Extension of Timeline for Implementation of Instructions" dated De”
📜 Read the original circular — full text as issued by RBI
RBI/2023-24/102
DoR.MCS.REC.61/01.01.001/2023-24
December 29, 2023
All Commercial Banks (including Small Finance Banks, Local Area Banks and Regional Rural Banks, excluding Payments Banks)
All Primary (Urban) Co-operative Banks
All NBFCs (including HFCs) and
All India Financial Institutions (EXIM Bank, NABARD, NHB, SIDBI and NaBFID)
Madam / Dear Sir,
Fair Lending Practice - Penal Charges in Loan Accounts: Extension of Timeline for Implementation of Instructions
Reference is invited to RBI circular DoR.MCS.REC.28/01.01.001/2023-24 dated August 18, 2023 on ‘Fair Lending Practice - Penal Charges in Loan Accounts’.
2. In terms of paragraph 3 (viii) of the circular, the instructions were to come into effect from January 1, 2024. However, considering that certain clarifications and additional time has been sought by some regulated entities (REs) to reconfigure their internal systems and operationalize the circular, it has been decided to extend the timeline for implementation of the instructions by three months. Accordingly, REs shall ensure that the instructions are implemented in respect of all the fresh loans availed from April 1, 2024 onwards. In the case of existing loans, the switchover to new penal charges regime shall be ensured on the next review/ renewal date falling on or after April 1, 2024, but not later than June 30, 2024.
3. A set of frequently asked questions (FAQs) providing clarifications related to implementation of the circular will be uploaded in the FAQs section of the RBI website shortly.
Yours faithfully,
(Santosh Kumar Panigrahy)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2023-24/102 · issued 29 Dec 2023. The plain-English explanation above is BankPulse’s own independent summary.
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12585&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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