With reimbursements ranging from 0.5% to 2.5% on loans and significant differences between banks, the RBI and the Indian Banks’ Association hold discussions about standardizing costs in more than 100 retail products. | Photocredit: Francis Mascarenhas/Reuters
The Central Bank of India is in order to lower lenders for some consumer products, according to people familiar with the issue, a drive that can jeopardize the billions of dollars in the country of reimbursements.
In recent weeks, officials from Reserve Bank of India have transferred to banks that it wants a reduction in service costs – including those for payment cards, minimum balance violations and late payments, said the people who asked not to be identified about private interactions. The RBI, who arranges the lenders, did not respond to requests for comments.
Retassing Surge draws the eye of the regulator
The move follows a renewed drive between the Indian banks in recent years in lending, part of a way to diversify after many were burned during a cycle of barriers. Growth in areas such as personal loans, financing for cars and smaller companies has made the retail market lucrative for banks, while at the same time it had attracted the attention of a watchdog that dealt with the pace of expansion.
Clients with a low income are confronted with the biggest burden
The central bank is especially aware of reimbursements that have disproportionate influence on customers with a low income in the most densely populated country in the world, people said. The RBI has not prescribed a specific reach for charges, they said, by leaving it to the discretion of banks, they said.
There are no mandatory thresholds on bank allowances. Processing costs for retail and small business loans usually vary from 0.5% to 2.5%, whereby some banks drain the loan of the home credit at 25,000 rupees ($ 285), according to data collected by Bankbazaar, an online financial market.
Banks Rebounds Rebounds Banks
Income from the reimbursement at Indian banks have shown early signs to return this financial year after a period of slower growth. In the quarter that ended in June, the metric rose by 12% to around 510.6 billion rupees from the previous year, and an increase of 6% in the previous three months, according to data from India Ratings & Research.
The Indian Banks’ Association is also in discussions with banks about more than 100 retail products that could be in the sights of the RBI, the people said. The broad differences in reimbursements that are paid for the same products by different customers has also attracted the attention of the central bank, they said.
The industrial lobby group did not respond to requests for comments.
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Published on September 19, 2025
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