The Chamber of Small Industry Associations (COSIA) is thrilled to announce a significant victory for the Micro and Small Enterprises (MSE) sector, following the Reserve Bank of India’s (RBI) recent decision to prohibit banks and non-banking financial companies (NBFCs) from imposing foreclosure charges and pre-payment penalties on term loans granted to MSEs. This decision was made during the Monetary Policy Committee (MPC) meeting held from 7th to 9th October, 2024.
COSIA has been a strong advocate for this critical measure, engaging in discussions with the RBI and actively participating in the RBI’s Empowered Committee for Micro, Small, and Medium Enterprises (MSMEs). Our persistent efforts have emphasized the need for fair lending practices that support the growth and sustainability of MSEs in India.
The prohibition of these charges is expected to provide much-needed relief to MSEs, enabling them to manage their finances more effectively and invest in their growth without the fear of incurring additional costs. This decision marks a pivotal moment in the ongoing effort to create a more supportive financial environment for MSEs.
As we await the release of the draft circular for public consultation, COSIA remains committed to ensuring the successful implementation of this measure. We believe it will have a profound impact on the MSE sector, promoting greater access to finance and enhancing overall economic stability.
To ensure the success of this measure, we urge the RBI to remain vigilant in its implementation and oversight, as banks have historically been known to overlook such directives. A proactive approach from the RBI in monitoring compliance will be essential to guarantee that MSEs truly benefit from this landmark decision and can thrive without the burden of unfair charges.
