The Reserve Bank of India (“RBI”) notifies RBI (Pre-Payment Charges on Loans) Directions, 2025.
The RBI through notification dated 02.07.2025 has issued the RBI (Pre-Payment Charges on Loans) Directions, 2025 (“RBI Pre-Payment Charges Directions”). These directions regulate activities of all commercial banks (excluding payment banks), cooperative banks, Non-Banking Finance Companies (“NBFCs”), and All India Financial Institutions (“AIFIs”) concerning levy of pre-payment charges in case of loans sanctioned to Micro and Small Enterprises (“MSEs”) and inclusion of restrictive clauses in loan agreements to deter borrowers from refinancing their loans from another lender either for availing lower rates of interest or better terms of service.
Key Takeaways:
- The RBI Pre-Payment Charges Directions shall apply to all loans (both demand and term loans) and advances sanctioned or renewed after 01.01.2026.
- In case of loans with a combination of fixed and floating interest rates, the RBI Pre-Payment Directions shall be applicable to such loans which have a floating interest rate at the time of prepayment.
- The exemption from pre-payment charges shall be applicable irrespective of the source of funds being used for partial or full pre-payment and without any lock-in period
- Banks and financial institutions cannot charge pre-payment penalties on floating rate loans for individuals (non-business purposes) and MSEs (business loans), encouraging borrowers to refinance freely.
- In case of term loans, pre-payment charges to be levied by the RE shall be based on the amount being prepaid.
- For cash credit/overdraft closure before the due date, charges cannot exceed the sanctioned limit; no charges if the borrower pre-informs and closes on the due date.
The Insolvency and Bankruptcy Board of India (“IBBI”) notifies Insolvency and Bankruptcy Board of India ( Insolvency Resolution Process for Corporate Persons) (Fifth Amendment) Regulations, 2025.
The IBBI notified the IBBI (Insolvency Resolution Process for Corporate Persons) (Fifth Amendment) Regulations, 2025 (“Fifth Amendment Regulations”) by notification dated 04.07.2025 to amend the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“Principal CIRP Regulations”). The Fifth Amendment Regulations came into force on the date of its publication in the Official Gazette i.e., 05.07.2025.
Key Takeaways:
- Regulation 36(2) of the Principal CIRP Regulations has been amended to insert a new clause (ha) requiring disclosure of details of:
- All identified avoidance transactions as stipulated under Chapter III of the Insolvency and Bankruptcy Act, 2016 (“IBC”).
- Fraudulent or wrongful trading under Chapter IV of the IBC.
- Preferential and other transactions as required under Regulation 35A of the Principal CIRP Regulations.
- Resolution plans can no longer assign avoidance transaction claims or fraudulent/wrongful trading claims unless these have been properly disclosed in the information memorandum and shared with resolution applicants within prescribed timelines.
- All prospective resolution applicants must be informed about such claims before submitting their plans, ensuring they have a complete picture of potential liabilities and risks.
- This restriction will not affect resolution plans that were already submitted to the adjudicating authority before the amendment came into force.
The Employees’ State Insurance Corporations (“ESIC”) launches SPREE 2025 to expand social security coverage.
The ESIC has approved SPREE 2025 (Scheme for Promotion of Registration of Employers and Employees), a special initiative aimed at expanding social security coverage under the Employees’ State Insurance Act, 1948.
Key Takeaways:
- The scheme will be active from 1st July to 31st December 2025 and provides a one-time opportunity for unregistered employers and employees; including contractual and temporary workers, to enrol without facing inspections or demands for past dues.
- The scheme aims to bring unregistered establishments and workers, particularly contractual and temporary employees, under the ESI social protection framework.
- Employers can register their units and employees digitally through the ESIC portal, Shram Suvidha portal, or MCA portal.
- Registration is valid from the declared date, with no liability for contributions or benefits for periods prior to registration.
- No inspection of past records or demands of dues for periods relating to periods before the declared date of registration by employers under this scheme.
- The scheme encourages voluntary compliance by removing fear of retrospective penalties and easing the registration process.
MCA notifies the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2025.
The Ministry of Corporate Affairs (“MCA”) by notification dated 07.07.2025 , has issued the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2025 to amend the Companies (Corporate Social Responsibility Policy) Rules, 2014.
Key Takeaways:
- The Amendment Rules shall come into force from 14.07.2025.
- The existing e-form CSR-1 for CSR registration has been replaced with a new format.
- Every entity undertaking CSR activities under Section 135 of the Companies Act must still register with the Central Government using the revised CSR-1.
- Registration via CSR-1 is a prerequisite for implementing CSR projects on behalf of companies.
- The changes aim to streamline compliance and improve monitoring of CSR implementing agencies.
