The Reserve Bank of India (Interest Rate on Advances) (Amendment Directions), 2025 amends the 2016 Directions, the Circular dated August 18, 2023, and the FAQs issued on January 10, 2025.
The key changes allow banks to reduce spread components for loan categories earlier than three years to retain customers, provided this is done on justifiable, non-discriminatory grounds in line with policy. Regulated entities (REs) may also provide borrowers the option to switch from floating to fixed rates at the time of reset, with limits specified in their Board-approved policies. FAQs have been aligned by revising FAQ 3 and deleting FAQs 4 and 5.
These amendments will be effective from October 1, 2025.
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