bank loan 2025 new rules: The Reserve Bank of India (RBI) has announced the implementation of many new rules on bank loans from January 2025. The objective of these rules is to provide better facilities to the customers and further strengthen the banking system. These new rules will be applicable on all types of bank loans including home loan, car loan, personal loan.
Loan borrowers will get many benefits from these new rules. Such as reduction in interest rates, speed in loan processing and digital loan facility. It will also help banks to better assess the credit history of customers. Let us know about these new rules in detail.
Major new rules applicable to bank loans
Here is a brief overview of the key new rules that will come into effect from January 2025:
| Rule | Description |
| credit information update | It is mandatory to update information to credit bureau every 15 days. |
| digital loan | Digital loan facility will be available in all banks |
| reduction in interest rates | Loan interest rates reduced due to repo rate cut by RBI |
| Loan Processing Fee | There will be a cap on loan processing fees |
| Co-Lending Model | Banks and NBFCs will be able to jointly give loans |
| Kisan Credit Card | Kisan Credit Card limit will be increased |
| UPI limit | Loan EMI payment limit will increase through UPI |
| CIBIL Score | New criteria for calculating CIBIL score will come into effect |
New rule of credit information update
From January 2025, banks and NBFCs will have to update loan related information to credit bureaus every 15 days. Currently this update is done every month. This new rule will have many benefits:
- Credit history of loan takers can be better assessed
- There will be a ban on taking loans from multiple banks by the same person
- Default status can be known quickly
- It will help banks to assess the risk correctly
With this rule, loan takers will have to be careful and pay EMI regularly. Also, you will have to avoid taking multiple loans simultaneously.
Digital loan facility
RBI has directed all banks to provide digital loan facility. According to this:
- Loan can be applied for through mobile app or website.
- There will be facility of digital KYC
- Loan approval and disbursement process will be completely digital
- There will be paperless loan processing
This will make the process of taking loan faster and easier. Customers will not need to go to the bank.
Possibility of reduction in interest rates
RBI is likely to cut repo rate in 2025. This may also reduce the interest rates on bank loans. Experts estimate that:
- Home loan rates may come up to 8-8.5%
- Car loan can be available at the rate of 7-7.5%
- Personal loan rates can come up to 10-11%
However, interest rates will also depend on CIBIL score and other factors.
Cap on loan processing fees
RBI has directed banks to set a maximum limit on loan processing fees. According to this:
- Maximum 0.5% processing fee can be charged on home loan.
- Up to 1% fee can be charged on car loan
- Fees up to 2% will be allowed on personal loans
This will reduce the additional burden on the loan takers.
Launch of co-lending model
Banks and NBFCs will be able to jointly give loans. Under this model:
- Bank will provide 80% fund and NBFC will provide 20% fund.
- NBFC will give loan and servicing to the customer
- Risk and return will be shared between both the companies.
With this, customers will be able to get better service and loan at lower interest rates.
Increase in Kisan Credit Card limit
Kisan Credit Card limit will be increased to provide relief to farmers:
- Currently, loans up to Rs 1.6 lakh are available without guarantee.
- Now loan up to Rs 2 lakh will be available without any guarantee
- Small and marginal farmers will benefit from this
Loan EMI payment limit will increase through UPI
Loan EMI payment limit through UPI will be increased:
- UPI 123Pay limit will be increased from Rs 5,000 to Rs 10,000
- UPI Lite limit will be increased from Rs 500 to Rs 1,000.
- This will promote digital payments
New criteria for calculating CIBIL score
New criteria will be implemented for calculating CIBIL score:
- Credit card utilization will be given more importance
- Weightage of loan repayment history will increase
- Credit mix will also be included in the score
This will make the calculation of CIBIL score more accurate.
New rules on home loan
Some of the major new rules applicable to home loans are as follows:
- The interest rate on floating rate home loan will be revised every 3 months.
- Pre-payment penalty will be completely abolished
- Home loan insurance will be mandatory
- Digital home loan facility will be available in all banks
New rules on car loan
Some major new rules applicable to car loans:
- Low interest rates and long term loans on electric vehicles
- New rules will also apply to used car loans
- Minimum down payment for car loan will be reduced from 10% to 5%.
- Car loan tenure will be increased from 7 years to 8 years
New rules on personal loan
Some major new rules applicable to personal loans:
- Digital personal loan facility will be available in all banks
- The maximum amount of personal loan will be increased from Rs 25 lakh to Rs 50 lakh.
- Processing fee on personal loan will not be more than 2%
- Minimum CIBIL score for personal loan will be reduced from 700 to 650.
New rules on education loan
Some major new rules applicable to education loan:
- Education loan limit will be increased for studying abroad
- Interest subsidy facility on education loan will continue
- There will be no need of co-borrower for education loan
- Education loan tenure will be increased from 15 years to 20 years.
New rules on MSME loan
Some major new rules applicable to MSME loans:
- Collateral free limit for MSME loan will be increased from Rs 10 lakh to Rs 20 lakh.
- Guarantee cover on MSME loans will be increased from 75% to 85%.
- Digital KYC facility will be provided for MSME loans.
- Processing fee on MSME loan will not be more than 1%.
Disclaimer:
This article is for informational purposes only. Although we have tried to provide accurate information, bank loan rules are subject to change from time to time. Please consult your bank or financial advisor before making any financial decisions. We are not responsible for any action taken based on the information given in the article.
