Regulatory Alerts2025-01-21
Early Settlement Guidance Note for Micro Lenders
The Non-Bank Financial Institution Regulatory Authority (NBFIRA) mandates that micro lenders cap early settlement fees at thirty calendar days’ interest on the outstanding principal, applicable only when borrowers waive a written notice period. Lenders must amend their loan application forms to clearly reflect this conditional fee structure and ensure compliance with Regulation 14(4) of the Micro Lending Regulations. The directive becomes effective on July 1, 2024, applying exclusively to new loans while mitigating lenders' expected interest income loss from premature repayments.
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