The Chamber of Small Industry Associations (COSIA) is pleased to share an important update following the Reserve Bank of India’s (RBI) release of the draft circular on the prohibition of foreclosure charges and pre-payment penalties on term loans granted to Micro and Small Enterprises (MSEs). The draft circular, published on 21st February, 2025, is a follow-up to the announcement made in the RBI’s Statement on Developmental and Regulatory Policies dated 9th October, 2024.
In our earlier post, COSIA had wholeheartedly welcomed this progressive move by the RBI, recognizing it as a landmark step towards promoting fair lending practices and reducing the financial burden on MSEs. Our advocacy for this measure, including active participation in the RBI’s Empowered Committee for MSMEs, has always focused on enhancing financial access and stability for MSEs.
The draft circular is now open for comments and feedback from stakeholders and the public until 21st March, 2025. COSIA urges all relevant stakeholders to actively participate in this consultation process to ensure that the final guidelines align with the needs of the MSE sector.
We remain fully committed to supporting this initiative and will encourage our members and the wider MSE community to actively participate in the consultation process. “Additionally, we urge RBI to continue with a vigilant and proactive approach in monitoring compliance by banks and NBFCs to safeguard the intended benefits for the MSE sector,” said Mr. Sandeep Parikh, President of COSIA
For detailed information, please refer to the official RBI draft circular through the following link: Draft Circular on Prohibition of Foreclosure Charges and Pre-Payment Penalties.
