RBI Personal Loan Guidelines - Eligibility, Charges & Fair Practices

1. Provide complete information about interest rates
2. Disclose processing fees, foreclosure charges, and penalties
3. Share the repayment schedule and loan terms clearly
4. Inform customers about changes in interest rates or charges

This helps borrowers make informed decisions.

2. Standardised Interest Rate Disclosure (EPR)

From 2023, RBI requires lenders to disclose the Annual Percentage Rate (APR) or Effective Percentage Rate (EPR). EPR shows the total cost of the loan per year, including:

1. Interest rate
2. Processing fee
3. Documentation charges
4. Insurance (if applicable)

This helps customers compare loans across lenders more easily.

3. No Misleading Loan Offers

RBI strictly prohibits lenders from:

1. Misleading advertisements
2. Fake pre-approved loan claims
3. Hidden charges
4. Aggressive sales practices

All communication must be accurate and transparent.

4. Guidelines on Recovery Practices

RBI has issued clear rules for recovery agents:

1. They cannot threaten, abuse, or harass customers.
2. Calls are allowed only between 8 AM to 7 PM (per permitted time window).
3. Agents must carry valid ID cards.
4. They must follow a respectful and professional approach.

Banks are responsible for the conduct of their collection agencies.

5. Credit Scoring and Loan Eligibility

Lenders must assess loan eligibility based on:

1. Income
2. Repayment capacity
3. Credit score
4. Existing loans (debt-to-income ratio)

RBI requires fair and non-discriminatory evaluation.

6. Loan Agreement Copy & Key Facts Statement (KFS)

RBI mandates lenders to provide:

1. A signed loan agreement copy to the borrower
2. A Key Facts Statement (KFS) summarising: Interest rate EPR Loan amount Tenure EMIs Fees and charges

This ensures transparency and avoids surprise charges.

7. Cooling-Off / Look-Up Period

Under RBI digital lending guidelines, borrowers get a cooling-off period (usually 3–7 days), allowing them to:

1. Cancel the loan
2. Repay the principal
3. Without penalty

This protects customers from accidental or rushed borrowing decisions.

8. Data Privacy & Security Rules

RBI requires lenders to:

1. Protect customer data
2. Seek consent before sharing information
3. Not misuse or over-collect customer data
4. Store data securely

Borrowers must be informed about how their data is used.

9. Guidelines for Digital Lending

For loans sourced through apps/platforms:

1. Disbursal must be directly into the borrower’s bank account
2. All charges must be disclosed upfront
3. No automatic access to the borrower’s phone contacts
4. Loan servicing and grievance redressal must be clearly defined

This prevents fraudulent lending practices.

10. Grievance Redressal

Banks must provide:

1. A nodal officer
2. A customer care helpline
3. Steps to escalate complaints

If unresolved, borrowers can approach the RBI Ombudsman.

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