RBI CIRCULAR

Aadhaar Enabled Payment System – Due Dili- gence of AePS Touchpoint Operators

1. Aadhaar Enabled Payment System (AePS) is a payment system operated by National Payment Corporation of India (NPCI) that facilitates interoperable transactions using Aadhaar enabled authentication. AePS plays a prominent role in enabling financial inclusion.

2. In recent times, there have been reports of frauds perpetuated through AePS due to identity theft or compromise of customer To protect bank customers from such frauds, and to maintain trust and confidence in the safety and security of the sys- tem, a need is felt to enhance the robustness of AePS. Accordingly, as announced in Statement on Develop- mental and Regulatory Policies dated February 08, 2024, it has been decided to issue directions for streamlining the process for onboarding of AePS touchpoint operators and strengthening fraud risk management. Detailed instructions are placed in the Annex.

3. These directions are issued under Section 18 read with Section 10(2) of the Payment and Settlement Systems (PSS) Act, 2007 (Act 51 of 2007) and shall come into effect from January 01, 2026.

The Depositor Education and Awareness (DEA) Fund Scheme, 2014 – Revised Operational Guidelines

1. The Depositor Education and Awareness (DEA) Fund Scheme, 2014, prescribes the process to be followed by the banks for transfer to and claim of the amounts transferred to DEA Fund, including submission of vari- ous returns.

2. Instructions have been issued to banks from time to time in the form of operational guidelines since 2014. A review has recently been carried out to consolidate and rationalise the extant The revised in- structions are provided at Annex.

3. These instructions are issued in exercise of powers conferred under Sections 26A and 35A of the Banking Regulation Act, 1949, and are applicable to all the banks covered under the DEA Fund Scheme, viz., Commercial Banks (including RRBs, LABs, SFBs and PBs) and all Co-operative Banks.

4. The instructions shall come into effect from October 01, 2025.

Reserve Bank of India (Pre-payment Charges on Loans) Directions, 2025

1. Availability of easy and affordable financing to Micro and Small Enterprises (MSEs)1 is of paramount importance. However, Reserve Bank’s supervisory reviews have indicated divergent practices amongst Regulated Entities (REs) with regard to levy of pre-payment charges in case of loans sanctioned to MSEs which lead to customer grievances and disputes. Further, certain REs have been found to include restrictive clauses in loan contracts/ agreements to deter borrowers from switching over to another lender, either for availing lower rates of interest or better terms of service. Accordingly, as announced in the Statement on Developmental and Regulatory Policies dated Oc- tober 9, 2024, a draft circular in this regard was is- sued on February 21, 2025 for public consultation.

2. Based on a review of the supervisory findings and pub- lic feedback received on the draft circular, the Reserve Bank, in exercise of the powers conferred by Sections 21, 35A and 56 of the Banking Regulation Act, 1949, Sections 45JA, 45L and 45M of the Reserve Bank of India Act, 1934 and Section 30A of the National Hous- ing Bank Act, 1987, hereby issues the Directions here- inafter specified.

3(i) These Directions shall be called the Reserve Bank of India (Pre-payment Charges on Loans) Directions, 2025.

(ii) These Directions shall be applicable to all loans and advances sanctioned or renewed on or after January 1, 2026.

4. These Directions shall apply to all commercial banks (excluding payments banks), co-operative banks, NBFCs and All India Financial Institutions.

5. An RE shall adhere to the following Directions regard- ing levy of pre-payment charges on all floating rate loans and advances:

i. For all loans granted for purposes other than busi- ness to individuals, with or without co-obligant(s), an RE shall not levy pre-payment charges;

ii. For all loans granted for business purpose to indi- viduals and MSEs, with or without co-obligant(s):

a. A commercial bank (excluding Small Finance bank, Regional Rural bank and Local Area bank), a Tier 4 Primary (Urban) Co-operative bank, an NBFC-UL, and an All India Financial Institution shall not levy any pre-payment

b. A Small Finance bank, a Regional Rural bank, a Tier 3 Primary (Urban) Co-operative bank, State Cooperative bank, Central Cooperative bank and an NBFC-ML shall not levy any pre- payment charges on loans with sanctioned amount/ limit up to Rs. 50 lakh.

iii. The Directions at paragraphs 5(i) and 5(ii) above shall be applicable irrespective of the source of funds used for pre-payment of loans, either in part or in full, and without any minimum lock-in period.

iv. Applicability of above Directions for dual/ special rate (combination of fixed and floating rate) loans will depend on whether the loan is on floating rate at the time of pre-payment.

6. In cases other than those mentioned at paragraphs 5(i) and 5(ii) above, pre-payment charges, if any, shall be as per the approved policy of the RE. However, in case of term loans, pre-payment charges, if levied by the RE, shall be based on the amount being prepaid. In case of cash credit/ overdraft facilities, pre-payment charges on closure of the facility before the due date shall be levied on an amount not exceeding the sanc- tioned limit.

7. In case of cash credit/ overdraft facilities, no pre-pay- ment charges shall be applicable if the borrower inti- mates the RE of his/ her/ its intention not to renew the facility before the period as stipulated in the loan agreement, provided that the facility gets closed on the due date.

8. An RE shall not levy any charges where pre-payment is effected at the instance of the RE.

9. The applicability or otherwise of pre-payment charges shall be clearly disclosed in the sanction letter and loan agreement. Further, in case of loans and advances where Key Facts Statement (KFS) is to be pro- vided as specified in the Reserve Bank’s circular dated April 15, 2024 on Key Facts Statement for Loans and Advances, the same shall also be mentioned in the KFS. No pre-payment charges which have not been disclosed as specified herein shall be charged by an RE.

10. An RE shall not levy any charges/ fees retrospectively at the time of pre-payment of loans, which were waived off earlier by the RE.

11. Repeal Provisions

With the issue of these Directions, the instructions contained in the circulars/ Master Directions men- tioned in Annex, issued by the Reserve Bank, shall stand repealed from the effective date of these Direc- tions. All the repealed circulars shall be deemed to have been in force during the relevant periods, prior to the coming into effect of these instructions.