Penal charges to replace penal interest for loan defaulters: RBI

RBI has announced that penal interest levied on loan defaulters will be replaced with penal charges. "It has been decided that any penalty for delay/default in servicing of the loan...shall be in form of 'penal charges'," RBI said. It added that the decision has been taken as "divergent practices" by regulated entities in levying penal interest led to customer grievances.