Summary
This guide outlines the penal charges applicable for non-compliance with material terms and conditions of loan contracts, effective from April 1, 2024, as per the RBI Circular dated August 18, 2023. It specifies that any penalty charged will not be capitalized, meaning no further interest will be computed on such charges. The document details the rights of the bank to levy penal charges without adding them as penal interest. It presents a grid for MSME and non-MSME customers, defining the specific charges for various breaches, including overdue instances, non-creation of security, and breaches of financial and non-financial covenants. The summary includes the frequency of monitoring and charging for these penal charges, ensuring transparency and standardization for borrowers. The document emphasizes that the quantum of charges will be reasonable and non-discriminatory within product categories, with specific amounts outlined for various infractions.
