**Executive Summary**
This document presents the Government of India's response to Unstarred Question No. 2469 in Lok Sabha, dated December 15, 2025, regarding complaints about increases in interest rates by Non-Banking Financial Companies (NBFCs) and Housing Finance Companies (HFCs). The response includes data from the Reserve Bank of India (RBI) and the National Housing Bank (NHB) on complaints received during FY 2024-25 and the period from October 1, 2024, to September 30, 2025. The companies have been advised to follow the guidelines.
**Key Points / Main Content**
* **Complaints Received Regarding Interest Rate Issues (RBI Data):**
* Excessive interest charged/discrepancy in interest charged: 493 complaints.
* Changes in interest rate/annualized interest rate not communicated as per RBI guidelines: 141 complaints.
* Changes in interest rate effected retrospectively: 104 complaints.
* Issues related to change of benchmark regime for floating interest rates: 56 complaints.
* Total Complaints Received (RBI Data): 794 complaints.
* **Complaints Received Regarding Interest Rate Issues (NHB Data):**
* 1196 complaints relating to rate of interest (including excess rate of interest) were received from 1.10.2024 to 30.9.2025.
* **Complaints Received Regarding Extension of Loan Tenures:**
* RBI received 123 complaints for FY 2024-25 about extending loan tenures without informing the borrower.
* NHB received 69 complaints from 1.10.2024 to 30.9.2025, about extending loan tenures without the borrowers’ consent.
* **Complaints Regarding Switching Between Floating and Fixed Rates:**
* RBI received 56 complaints about changes to the benchmark system for floating interest rates.
* According to RBI Directions, NBFCs/HFCs may offer borrowers the option to switch to a fixed rate at the time of reset of interest rates, as per board-approved policy, which may specify the number of times a borrower can switch during the loan's term.
* All related charges for switching must be transparently disclosed in the sanction letter and at the time of any revisions.
* **Complaints Regarding Prepayment Penalties:**
* NHB received 528 complaints from 1.10.2024 to 30.9.2025 related to prepayment charges/pre-closure charges and delays in issuing foreclosure letters.
* RBI's Pre-payment charges on loans, Directions, 2025, does not allow Regulated Entities to levy pre-payment charges on all floating rate loans and advances granted for purposes other than business to individuals, if the loan has been sanctioned or renewed after 1.1.2026.
**Impact Analysis**
**NBFCs and HFCs**
* **Impact:** NBFCs and HFCs are subject to increased scrutiny and potential regulatory action due to the high volume of complaints regarding interest rate practices, loan tenure extensions, and prepayment penalties.
* **Action Required:** NBFCs and HFCs must adhere to RBI guidelines and directives on interest rate disclosures, loan tenure modifications, switching between floating and fixed rates, and prepayment charges. They must also follow transparent communication practices with borrowers.
**Borrowers**
* **Impact:** Borrowers are directly affected by unilateral increases in interest rates, undisclosed changes to loan terms, and unfair imposition of prepayment penalties.
* **Action Required:** Borrowers should carefully review loan agreements and stay informed about their rights and protections under RBI regulations. They should also report any suspected violations to the appropriate authorities (RBI, NHB).
Key Entities Referenced
Reserve Bank of India (RBI): India's central bank, responsible for regulating banks and financial institutions, including NBFCs.
Non-Banking Financial Companies (NBFCs): Financial institutions that provide banking services without holding a banking license.
Housing Finance Companies (HFCs): Financial institutions that specialize in providing loans for the purchase or construction of homes.
National Housing Bank (NHB): The apex regulatory body for housing finance companies in India.
RBI (NBFC - Responsible Business Conduct) Directions, 2025: Guidelines issued by the Reserve Bank of India concerning responsible business practices for NBFCs.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF FINANCIAL SERVICES
LOK SABHA
UNSTARRED QUESTION NO- 2469
ANSWERED ON MONDAY, DECEMBER 15, 2025/ AGRAHAYANA 24, 1947 (SAKA)
Increase in Interest Rates of NBFCs
2469. SHRI AZAD KIRTI JHA:
Will the Minister of FINANCE be pleased to state:-
(a) whether the Government or the Reserve Bank of India have received complaints relating to
unilateral increase in interest rates by Non-Banking Financial Companies (NBFCs) and Housing
Finance Companies (HFCs), if so, the details thereof;
(b) whether complaints have also been received regarding extension of loan tenures without the
borrowers’ prior consent and the non-availability of opt-out mechanisms, if so, the details
thereof;
(c) whether the Government has taken note of the violations of guidelines relating to switching
between floating and fixed rate structures for home loans, if so, the details thereof; and
(d) whether complaints have been received regarding imposition of pre-payment penalties on
borrowers seeking to transfer home loan accounts to other lenders and if so, the details thereof?
ANSWER
THE MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)
(a): As per Reserve Bank of India (RBI) data, the complaints received against Non-Banking
Financial Companies (NBFCs) for FY 2024-25 with respect to increase in interest rates along
with other discrepancies pertaining to interest rates are given below:
Particulars No. of Complaints
Excessive interest charged / discrepancy
493
in interest charged
Changes in interest rate/ annualized
interest rate not communicated as per 141
RBI guidelines
Changes in interest rate effected
104
retrospectively
Issues related to change of benchmark
56
regime for floating interest rates
Total 794As per the data received from National Housing Bank (NHB), it has received a total of 1196
complaints (615 complaints on Centralized Public Grievance Redress and Monitoring System
(CPGRAMS) and 581 complaints on Grievance Registration and Monitoring System-GRIDS)
pertaining to rate of interest (including excess rate of interest) for the period 1.10.2024 to
30.9.2025. It is to be mentioned that the complaints received on CPGRAMS, includes
complaints related to rate of interest (ROI)/excess ROI/tenure extension. As on date, all these
complaints have been closed, and the companies are advised to follow the guidelines.
(b): As per RBI data, a total of 123 complaints have been received pertaining to extension of
loan tenures without intimation in FY 2024-25. Also, as per the data received from NHB, during
the period 1.10.2024 to 30.9.2025, it has received 69 complaints related to extension of loan
tenures without the borrowers’ consent on the GRIDS portal.
(c): As per RBI data, a total of 56 complaints have been received with respect to issues related to
change of benchmark regime for floating interest rates. According to RBI (NBFC - Responsible
Business Conduct) Directions, 2025, at the time of reset of interest rates, an NBFC/HFC may,
at its option, provide a choice to the borrowers to switch over to a fixed rate as per their Board
approved policy. The policy, inter alia, may also specify the number of times a borrower will be
allowed to switch during the tenor of the loan.
Also, all applicable charges for switching of loans from floating to fixed rate and any other
service charges/administrative costs incidental to the exercise of the above options shall be
transparently disclosed in the sanction letter and also at the time of revision of such
charges/costs by the NBFC/HFC from time to time.
(d): As per the data received from NHB, during the period 1.10.2024 to 30.9.2025, it has
received a total of 528 complaints (351 complaints on CPGRAMS and 177 complaints on
GRIDS) related to imposition of prepayment charges/ pre-closure charges on borrowers and
delay in issuance of foreclosure letter. As on date, all these complaints have been closed, and the
companies are advised to follow the guidelines.
As per RBI’s Pre-payment charges on loans, Directions, 2025, applicable to all loans and
advances sanctioned or renewed after 1.1.2026, a Regulated Entity (RE) shall not levy pre-
payment charges on all floating rate loans and advances granted for purposes other than
business to individuals, with or without co-obligant(s).
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