RBI's Ban on Flexi-Loan Products and Its Market Impact
· Business · Business Standard
The Reserve Bank of India has restricted certain flexi-loan products, citing concerns over transparency and the underlying structure of these credit offerings. These products often allowed borrowers to draw funds against a pre-approved limit while paying interest only on the utilized amount. Critics argue that the regulatory move may limit consumer access to credit and stifle innovation in the retail lending space. The central bank maintains that such products often mask the true cost of borrowing and complicate debt management for retail customers. Financial institutions are now required to align their credit products with existing fair-practice guidelines to ensure clearer disclosure of interest rates and repayment terms.
Why it matters
The move impacts retail borrowers and non-banking financial companies by potentially increasing the cost of credit and forcing a redesign of popular, flexible loan products.
Read the original report — Business Standard
Join us on Telegram
Breaking news the moment it lands. At 10,000 members we ship the Android app.