4 circulars simplified · plain language · compliance checklists · linked to source. Verified against official rbi.org.in.
RBI/2023-24/53
Borrower-friendly · Revenue-restrictingFair LendingPenal Charges
Late-payment penalties become flat 'charges', not extra interest — and can't be compounded
TL;DROn default, lenders may levy a flat 'penal charge' but not 'penal interest' — and cannot compound it or treat it as a profit line.
RBI/2025-26/64
Borrower-friendly · Pro-competitionFair LendingPre-payment
No pre-payment charges on floating-rate loans to individuals — foreclose or switch lenders free
TL;DRFrom 1 January 2026, lenders cannot levy pre-payment or foreclosure charges on floating-rate loans to individuals for non-business purposes — no lock-in, regardless of fund source.
RBI/2023-24/85
Tightening · CapitalCapital / BaselRisk Weights
Risk weight on unsecured consumer credit raised to 125% — but secured LAP is excluded
TL;DRRBI raised the risk weight on unsecured consumer credit to 125% and credit cards to 150% (banks) — but housing, education, vehicle, gold and secured property loans like LAP are excluded.
RBI/2021-22/125
Tightening · Recovery disciplineAsset ClassificationNPA
NPAs are tagged at day-end after 90 days overdue — and upgrade to 'standard' only after ALL arrears are cleared
TL;DRLoan accounts are flagged SMA/NPA at day-end based on continuous overdue days (NPA after 90), and an NPA can return to 'standard' only after the borrower clears the entire arrears of interest AND principal.