The Reserve Bank of India (RBI) has extended the timeline for the implementation of fair lending practice by banks on penal charges in loan accounts by three months. The instructions were to come into effect from January 1, 2024. 

“However, considering that certain clarifications and additional time has been sought by some regulated entities (REs) to reconfigure their internal systems and operationalize the circular, it has been decided to extend the timeline for implementation of the instructions by three months,” the RBI said in a circular.

Accordingly, REs shall ensure that the instructions are implemented in respect of all the fresh loans availed from April 1, 2024 onwards. In the case of existing loans, the switchover to new penal charges regime shall be ensured on the next review/ renewal date falling on or after April 1, 2024, but not later than June 30, 2024,” it added.