Regulatory Alerts2025-01-25
Early Settlement Guidance Note for Micro Lenders
The Non-Bank Financial Institution Regulatory Authority (NBFIRA) mandates that micro lenders cap early settlement fees at sixty calendar days’ interest on the outstanding principal and restrict their application to borrowers who do not provide written notice within thirty days or a shorter prescribed period. To comply, micro lenders must update their loan application forms to clearly indicate these conditional fee structures and notification requirements. The directive takes effect on January 1, 2025, applying only to loans originated after that date.
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