FICO Welcomes RBI’s Ban on Foreclosure Charges for MSE Business Loans
The Federation of Industrial & Commercial Organization (FICO) has welcomed the Reserve Bank of India’s (RBI) decision to ban foreclosure (pre-payment) charges on business loans taken by Micro and Small Enterprises (MSEs), effective from January 1, 2026.
City Air News
Jul 12, 2025 08:07
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Ludhiana, July 12, 2025: The Federation of Industrial & Commercial Organization (FICO) has welcomed the Reserve Bank of India’s (RBI) decision to ban foreclosure (pre-payment) charges on business loans taken by Micro and Small Enterprises (MSEs), effective from January 1, 2026.
Gurmeet Singh Kular, President of FICO, stated, “We are delighted to share this significant policy breakthrough, which brings major relief to Micro and Small Enterprises (MSEs) as well as individual borrowers across the country. RBI’s new directions on ‘Pre-payment Charges on Loans’—notified on July 5, 2025, and coming into force from January 1, 2026—prohibit banks and financial institutions from imposing pre-payment penalties on most business loans availed by MSEs and individuals.”
Manjinder Singh Sachdeva, General Secretary of FICO, added, “We wholeheartedly welcome the RBI’s directive to eliminate pre-payment charges on floating-rate business loans extended to individuals, MSEs, and co-borrowers. The policy is applicable across all loan amounts and sources, whether the repayment is partial or full, and importantly, there is no lock-in period. The industry at large views this as a much-needed and forward-looking move.”
