RBI master-direction RBI/DOR/2025-26/336 · 28 Nov 2025
Official title
Reserve Bank of India (All India Financial Institutions – Responsible Business Conduct) Directions, 2025 (Updated as on July 1, 2026)
Summary
Check the official recordThe Reserve Bank of India establishes a framework for responsible business conduct by All India Financial Institutions (AIFIs). AIFIs must implement board-approved policies for fair practices, grievance redressal, and penal charges. The directions mandate transparent disclosure of loan fees, interest rates, and terms. AIFIs must provide written reasons for loan rejections and ensure non-discriminatory lending. The rules prohibit specific recovery practices, such as harassment or calls outside designated hours. AIFIs must comply with Supreme Court orders regarding customer service and may offer relief measures during declared calamities. These directions apply to EXIM Bank, NABARD, SIDBI, NHB, and NaBFID. Existing guidelines on responsible business conduct are repealed.
What you must do
Key dates
Who is affected
Thresholds
Exceptions
RBI/DOR/2025-26/336 DOR.MCS.REC.No.255/01-01-040/2025-26 November 28, 2025
Previous Versions
Reserve Bank of India (All India Financial Institutions – Responsible Business Conduct) Directions, 2025 (Updated as on July 1, 2026)
Table of Contents
Chapter I – Preliminary
Chapter II – Institutional Framework A. Role of Board
Chapter III – Responsible Lending Conduct A. Fair Practices Code B. Penal Charges in Loan Accounts C. Pre-payment charges on loans D. Responsibilities of an AIFI employing Recovery Agents
Chapter IV – Miscellaneous Instructions A. Compliance with Hon’ble Supreme Court Order dated April 30, 2025 in the matter of Pragya Prasun and Ors. vs Union of India and Ors. (W.P.(C) 289 of 2024) and Amar Jain vs Union of India and Ors. (W.P.(C) 49 of 2025) B. Measures in case of declaration of calamity
Chapter V – Repeal and Other Provisions A. Repeal and saving B. Application of other laws not barred C. Interpretations
In exercise of the powers conferred by Section 45L of the Reserve Bank of India Act, 1934 and all other provisions / laws enabling the Reserve Bank of India (hereinafter called the Reserve Bank) in this regard, the Reserve Bank being satisfied that it is necessary and expedient in public interest so to do, hereby, issues these Directions.
These Directions shall be called the Reserve Bank of India (All India Financial Institutions – Responsible Business Conduct) Directions, 2025.
These Directions shall become effective from the date of issuance unless indicated otherwise.
(1) Fair Practices Code
(2) Grievance redressal mechanism
(3) Penal charges
Note: The grievance redressal mechanism shall ensure that all disputes arising out of the decisions of the AIFI's functionaries are heard and disposed of at least at the next higher level.
An AIFI shall disclose all information relating to charges / fees for processing in the loan application forms.
An AIFI shall transparently disclose the following to the borrower:
(1) all information about fees / charges payable for processing the loan application;
(2) the amount of fees refundable if loan amount is not sanctioned / disbursed;
(3) pre-payment options and charges, if any;
(4) penalty for delayed repayments if any;
(5) conversion charges for switching loan from fixed to floating rates or vice versa;
(6) existence of any interest reset clause; and
(7) any other matter which affects the interest of the borrower.
Such information should also be displayed on the website of the AIFI for all categories of loan products.
An AIFI shall disclose 'all in cost' inclusive of all such charges involved in processing / sanction of loan application in a transparent manner to enable the customer to compare the rates/charges with other sources of finance. The AIFI shall ensure that such charges / fees are non-discriminatory.
An AIFI shall provide acknowledgement for receipt of all loan applications which shall also indicate the time frame within which loan applications will be disposed off.
An AIFI shall verify the loan applications within a reasonable period of time. If additional details / documents are required, they shall intimate the borrowers immediately.
An AIFI shall convey in writing, the main reason / reasons which, have led to rejection of the loan applications within the stipulated time for all categories of loans irrespective of any threshold limit.
An AIFI shall ensure that there is proper assessment of credit application by borrowers. It shall not use margin and security stipulation as a substitute for due diligence on credit worthiness of the borrower.
An AIFI shall convey to the borrower the credit limit along with the terms and conditions thereof and keep the borrower's acceptance of these terms and conditions given with his full knowledge on record.
Terms and conditions and other caveats governing credit facilities arrived at after negotiation between an AIFI and the borrower shall be brought in writing and duly certified by the authorised official.
An AIFI shall furnish a copy of the loan agreement along with a copy each of all enclosures quoted in the loan agreement to the borrower at the time of sanction / disbursement of loans.
The loan agreement shall clearly stipulate credit facilities that are solely at the discretion of lenders e.g., approval or disallowance of facilities, such as, drawings beyond the sanctioned limits, honouring cheques issued for the purpose other than specifically agreed to in the credit sanction, and disallowing drawing on a borrowal account on its classification as a non-performing asset or on account of non-compliance with the terms of sanction. The AIFI shall also specifically state that it does not have an obligation to meet further requirements of the borrowers on account of growth in business etc. without proper review of credit limits.
In the case of lending under consortium arrangement, the AIFI shall evolve procedures to complete appraisal of proposals in the time bound manner to the extent feasible and communicate their decisions on financing or otherwise within a reasonable time.
An AIFI shall ensure timely disbursement of loans sanctioned in conformity with the terms and conditions governing such sanction.
An AIFI shall give notice of any change in the terms and conditions including interest rates, service charges etc. The AIFI also ensure that changes in interest rates and charges are effected only prospectively.
Post disbursement supervision by an AIFI, particularly in respect of loans up to ₹2 lakh, shall be constructive with a view to taking care of any "lender-related" genuine difficulty that the borrower may face.
Before taking a decision to recall / accelerate payment or performance under the agreement or seeking additional securities, an AIFI shall give notice to borrowers, as specified in the loan agreement or a reasonable period, if no such condition exits in the loan agreement.
An AIFI shall release all securities on receiving payment of loan or realisation of loan subject to any legitimate right or lien for any other claim it may have against borrowers. If such right of set off is to be exercised, borrowers shall be given notice about the same with full particulars about the remaining claims and the documents under which the AIFI is entitled to retain the securities till the relevant claim is settled / paid.
