RBI Mandates Option for Borrowers to Switch to Fixed Rates Amidst Rising Interest

New Delhi: The Reserve Bank has directed banks and lenders to offer borrowers the choice of switching to a fixed interest rate during the interest rate reset period. This move comes in response to rising interest rates, which have led to customer complaints regarding extended loan tenures and increased EMI amounts without proper communication or consent.

The RBI has mandated financial institutions to establish a well-defined policy framework for communicating with borrowers about interest rate changes. This framework should clearly explain the potential impact of interest rate changes on EMIs and tenures. Borrowers should also be given the option to switch to a fixed interest rate if they so choose.

The RBI’s move is a welcome step for borrowers who are facing rising interest rates. It provides them with more options to manage their loan repayments and protect themselves from future interest rate hikes.