RBI Will Allow Borrowers To Change Their House Loan & Other Loan Rates Whenever They Want

The Reserve Bank Of India (RBI) announced on Thursday that it will provide a framework that will allow borrowers to transfer from floating to fixed interest rates, providing relief to borrowers of home, vehicle, and other loans who are suffering from the impact of high-interest rates.

At the announcement of the bi-monthly monetary policy, RBI Governor Shaktikanta Das stated that the framework will focus on clearly conveying to borrowers any reset in loan schedule and EMI quantum.

"The supervisory reviews undertaken by the Reserve Bank and the feedback and references from members of public have revealed several instances of unreasonable elongation of tenor of floating rate loans by lenders without proper consent and communication to the borrowers. To address the issue, it is proposed to put in place a proper conduct framework to be implemented by all REs to address the issues faced by the borrowers," RBI said in a statement.

Further added, "The framework envisages that lenders should clearly communicate with the borrowers for resetting the tenor and/or EMI, provide options of switching to fixed rate loans or foreclosure of loans, transparent disclosure of various charges incidental to the exercise of these options, and proper communication of key information to the borrowers. The detailed guidelines in this regard shall be issued shortly."

Mr. Lincoln Bennet Rodrigues, Chairman & Founder, The Bennet and Bernard Company, known for luxury themed homes in Goa, said, "We welcome RBI's decision to maintain status quo as it helps in holding the interest rates and sustaining the growth momentum in the real estate sector. In the residential segment, buyer sentiment has continued to be robust and this has resulted in home sales showing an appreciable rate of growth. Post-pandemic, the luxury housing market has acquired a strong foothold, thanks to the rising disposable incomes accompanied by a desire for better living, subsequently driving up prices in this segment. As buyers seek a signature style of living, this trend is expected to continue in the near future, given change in lifestyles, rapid urbanization and needs. The heightened demand for luxury properties has been further bolstered by the rise in investments from non-resident Indians (NRIs). However, a further reduction in the key rates would be widely celebrated as low interest rates have been a crucial factor in the revival of overall real estate demand and improvement in the liquidity situation which is vital for the sector."