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RBI Draft Norms On Foreclosure Loan Charges To Intensify Competition Among Lenders, Says Citi
While these norms can increase the competitive intensity for the fixed rate lenders, it can also reduce product profitability.
24 Feb 2025, 10:58 AM IST 
Forfeiting foreclosure charges will not only impact fee income, but also drive higher BT-Out, intensifying competition in lending rates, Citi said. (Photo: Vijay Sartape/NDTV Profit)
Competition in lending rates by banks and non-banking financial companies is set to increase after the Reserve Bank of India announced fresh guidelines on foreclosure or prepayment penalties on loans, according to Citi Research.In order to bring uniformity in prevalent divergent practices across lenders, RBI issued a draft circular that lenders will not levy any foreclosure charges on all floating rate loans to retail and micro, sm...
