“This marks yet another positive stride taken by the RBI to enhance transparency and uphold equity in lending, prioritizing the interests of borrowers. The recent modifications guarantee that all direct loan-related fees are fully unveiled within the comprehensive Annual Percentage Rate (APR) outlined in the Key Facts Statement (KFS). This ensures that such charges are transparently presented, eliminating any potential concealment within penal charge wordings.

Over the past year, the RBI has introduced new directives and updated existing ones pertaining to Digital Lending, KYC procedures, Co-Lending (FLDG), and now, Penal charges. These initiatives collectively aim to modernize regulatory frameworks in line with emerging products, technologies, and evolving business/lending models that have extended credit accessibility to previously untapped segments. A consistent theme woven through these actions is a heightened emphasis on standardized disclosures, particularly in relation to rates and charges, rendered in a simplified manner to facilitate borrowers’ comprehension of all lending terms and conditions. This commitment to clarity has now been extended to encompass penal charges as well.” – Anil Pinapala, CEO & Founder, FlexPay by Vivifi