RBI Caps Charges on Small Priority Sector Loans

The Reserve Bank of India (RBI) has announced that banks cannot impose excessive charges on loan amounts up to Rs 50,000 under priority sector lending (PSL). This directive, part of the revised PSL guidelines effective April 1, 2025, aims to make small loans more affordable for borrowers. The move is expected to benefit farmers, micro-entrepreneurs, and individuals from weaker sections of society. While the RBI hasn't specified a maximum charge limit, it has instructed banks to ensure that fees remain reasonable and transparent. This decision aligns with the central bank's efforts to enhance financial inclusion and improve credit access for priority sectors of the economy.

 

Source: Reserve Bank of India, Economic Times