<h1>RBI bans pre-payment penalties on floating-rate loans for individuals and small enterprises from January 2026</h1> The Reserve Bank of India directed banks and other lenders to stop charging pre-payment penalties on floating-rate loans to individuals and micro and small enterprises, including business loans. The directive applies to loans sanctioned or renewed from January 1, 2026. Different categories of financial institutions have varying restrictions, with some prohibited from charging pre-payment fees on loans up to fifty lakh rupees. The decision follows supervisory reviews revealing inconsistent practices among regulated entities that led to customer complaints. The rules apply regardless of fund sources used for pre-payment and without minimum lock-in periods.