What Every Borrower Should Know About RBI Guidelines on Personal Loans

Seeking a personal loan? Whether for planning a home renovation, managing an emergency, or booking a long-awaited trip – taking a personal loan can feel like a quick solution. But while quick loans and instant loans are easier to get, it’s important to understand the rules that protect you, the borrower.
That’s where the RBI guidelines come in.
At BankEMI, we believe informed borrowing is smart borrowing. Through this blog we will help you understand the key RBI guidelines on personal loans, how they affect you, and how to borrow personal loans safely.

Why RBI Guidelines Matter

The Reserve Bank of India (RBI) has set clear rules to make sure lenders treat borrowers fairly. Yet, many people don’t take the time to go through these rules before signing the agreement. 

RBI guidelines are meant to protect you. They ensure that banks and lenders provide clear, fair, and transparent loan terms. These rules cover everything from how your credit is checked to what fees are charged and how your loan is recovered.

RBI Guidelines On Personal Loans

1. How Lenders Check Your Creditworthiness

Before you get a personal loan, lenders look at your credit profile. This includes your income, job stability, existing loans, and credit score.

• A score above 750 is considered strong.
• A good credit score helps you qualify for low interest personal loans.
• Lenders must now update your credit records every 15 days (not monthly), starting 2025.

What this means for you:
Timely EMI payments will boost your credit faster, but delays will also show up sooner. Always try to clear dues on time and reduce any outstanding debt before applying for a loan.

2. Transparency in Interest Rates 

RBI allows banks and NBFCs to set interest rates based on your risk profile, but they must clearly show the Annual Percentage Rate (APR). 

Every lender must give you a Key Facts Statement (KFS) that includes:

• Total cost of the loan
• Processing fees
• Interest type (fixed or floating)
• Penalties (if any)

Borrowers can now also switch between fixed and floating rates during the loan term. This gives you more control over your repayment.

Tip: Always compare APRs, not just interest rates. APR includes all extra charges and gives a clearer picture of what you’ll actually pay. 

3. Loan Processing and Prepayment Rules

Here’s what RBI says lenders must do:

• Acknowledge your loan application and provide a timeline.
• Give you a loan sanction letter and copy of your agreement.
• Offer 3 days to review the KFS (or 1 day if loan is for less than 7 days).

Also, if your loan has a floating interest rate, you can prepay it without any penalty. Fixed-rate loans may have a foreclosure charge, usually around 2–6% of the balance.

What to remember:

Ask about prepayment terms before you finalise the loan. If you think you might repay early, look for a loan with no or low prepayment charges.

4. Digital Lending Is Now Regulated

Many people prefer to apply for instant loans online. RBI now regulates these platforms too. If you’re borrowing through an app or website:

• Make sure it’s backed by an RBI-registered lender. 
• You must receive a clear, written agreement and a KFS before accepting the loan. 
• All charges must be shown upfront, no hidden fees. 

What this means:
Stick to trustworthy platforms. At BankEMI, we only work with RBI-compliant lenders so you can apply for a personal loan with peace of mind. 

5. Fair Recovery Practices

If you ever miss an EMI, lenders can contact you but only between 8 AM and 7 PM. RBI strictly prohibits:

• Threats or harassment.  
• Visits to your home or office without notice
• Public shaming or sharing of your information.

If you feel mistreated, you can file a complaint with the RBI Ombudsman (an RBI-appointed official to address and resolve complaints related to banking services). 

What to do:
Keep track of your EMIs. If you’re unable to pay, inform your lender early. They might offer to adjust your EMI or extend your tenure.

Why Choose BankEMI for Personal Loans?

We’re not just a loan comparison site. We’re your borrowing partner. Here’s how we make a difference:

• Trusted Partners: We work only with RBI-approved banks and NBFCs.
• Easy Comparisons: View and compare offers from 30+ lenders in one place.
• Fast Approvals: Access quick loans with minimum paperwork.
• Expert Help: Our team helps you choose the best plan, not just any plan.
• No Hidden Costs: Everything is disclosed upfront.

Whether you’re looking for low interest personal loans or fast disbursal, our experts make sure you understand every step.

Final Thoughts

Borrowing money isn’t just about how fast you can get it, it’s about borrowing wisely. With the new RBI guidelines, you now have more rights, better protection, and greater control over your personal loan.
At BankEMI, we’re here to help you understand those rights and choose the best borrowing options for your needs. Whether you’re applying for instant loans, looking for quick loans, or just want the best low interest personal loans, we’re here to simplify the process.

Ready to borrow smart? Apply now and let BankEMI help you make informed financial choices.