RBI introduces guidelines for personal loan transparency

The Reserve Bank of India (RBI) has introduced new guidelines for personal loans, effective this year. Banks must now disclose the annual interest rate and the impact of benchmark rate changes in loan agreements and Key Fact Statements. Borrowers will receive quarterly statements detailing their loan status, including principal and interest paid, remaining EMIs, and the annual interest rate. In case of rising interest rates, banks must offer options like increasing EMIs, extending loan terms, or switching to fixed rates. Additionally, borrowers can switch back to floating rates after choosing a fixed rate, subject to bank policies and charges. These changes aim to provide more transparency and flexibility for personal loan borrowers.