Cc pre closure charge

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Shiv Karwa

200 Points Posted on 27 July 2023

I m registered in MSME, now icici bank take over my cc from sbi. now sbi want 2% pre closure charge. I want to know is pre closure charge applicable on msme. if not applicable then plz share notification

Replies (3)

Quick Summary

This discussion addresses whether pre-closure charges apply to MSME (Micro, Small, and Medium Enterprises) credit facilities, particularly when a credit card (CC) limit is transferred between banks. While SBI is requesting a 2% pre-closure charge, the user, registered as an MSME, questions its applicability. The advice given is to check the original loan sanction letter and relevant RBI circulars, as pre-closure charges on floating-rate loans to MSEs may be prohibited, especially for facilities renewed after January 1, 2026. If the charges seem unfair, escalating the issue to the bank's grievance cell or the RBI Ombudsman is recommended.

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

121543 Points Posted on 27 July 2023

Check your terms of the loan sanctioned with SBI. If pre-closure charges were incorporated in it, you have to pay it.

Aashok Kumar Sharma

Finance/Compliance Consultant

75646 Points Posted on 08 November 2026

Pre-closure charges on a CC limit:

• RBI's directions on foreclosure charges: no foreclosure charges or pre-payment penalties on floating-rate term loans to individual borrowers (for non-business purposes). For loans to MSEs (micro and small enterprises), RBI's 2024 directions (draft, finalised in 2025) prohibit foreclosure charges on floating-rate loans to individuals and MSEs (effective 1 January 2026, for loans sanctioned or renewed after that).

• For your case (MSME CC takeover from SBI to ICICI): check the sanction letter and current RBI circulars. If the CC is a floating-rate working capital facility to an MSE, a pre-closure charge may be impermissible, at least for facilities renewed after the effective date.

• Raise it with the bank's grievance cell, then the RBI Ombudsman (Integrated Ombudsman Scheme).

Aashok Kumar Sharma

Finance/Compliance Consultant

75646 Points Posted on 08 November 2026

Pre-closure charges on a CC limit:
• RBI's directions on foreclosure charges: no foreclosure charges or pre-payment penalties on floating-rate term loans to individual borrowers (for non-business purposes). For loans to MSEs (micro and small enterprises), RBI's 2024 directions (draft, finalised in 2025) prohibit foreclosure charges on floating-rate loans to individuals and MSEs (effective 1 January 2026, for loans sanctioned or renewed after that).
• For your case (MSME CC takeover from SBI to ICICI): check the sanction letter and current RBI circulars. If the CC is a floating-rate working capital facility to an MSE, a pre-closure charge may be impermissible, at least for facilities renewed after the effective date.
• Raise it with the bank's grievance cell, then the RBI Ombudsman (Integrated Ombudsman Scheme).