The central bank has directed scheduled banks to adhere to the set interest rates for refinanced agricultural and rural loans, prohibiting additional charges beyond regulatory limits. A circular was issued to all relevant bank managing directors following reports of some banks imposing extra interest on such loans. If borrowers repay within the agreed tenure, no additional interest is permitted, even if instalments are overdue. However, if repayment extends beyond the tenure, banks can charge extra interest for the overdue period. Typically, these loans have a one-year tenure, with instalment repayments. Despite overdue instalments, no extra interest will be levied if the loan is repaid within the stipulated year.
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