Loan Prepayment To Consent-First Digital Banking: What Will Change For Bank Customers From January 1, 2026

The banking and financial services sectors in India are set to witness a series of consumer-oriented regulatory changes from January 1, 2026. The Reserve Bank of India (RBI) and the Telecom Regulatory Authority of India (TRAI) have announced these regulations, with the aim of enhancing consumer protection by ensuring greater transparency in digital finance, as well as curtailing fraud related to financial communication.

Taken together, the changes will impact how customers repay loans, how banks activate digital services, how digital loans are offered and how official calls from banks are identified.

No Pre-Payment Charges for Floating-Rate Loans

Banks and non-banking financial companies (NBFCs) are prohibited from imposing fees for pre-payments or foreclosure on floating rate loans taken for non-business activities and are sanctioned on or after January 1, 2026.

This removes a longstanding cost barrier for customers in cases of early loan repayment. Borrowers will now be allowed to refinance loans, switch lenders, or even repay outstanding amounts ahead of schedule without attracting penalty charges that reduce the financial benefit of such a move.

The new rule does not prescribe a lock-in period, thus allowing flexibility throughout the loan tenure. Floating-rate loans taken by individuals for business purposes and even loans to micro and small enterprises are also covered, but are subject to limits set by lenders.

Consent-First Digital Lending Framework

Digital Lending is about to become even more regulated with RBI’s Digital Lending Directions, 2025, coming into full play from January 1, 2026. This means that banks and NBFCs, using digital platforms or applications to offer loans, will have to seek prior consents from their customers relating to personal information access.

This will also provide the consumers control over their data. This will ensure that loan apps are not able to access their contact, location, camera, or device functionality without their consent, and consumers can also withhold consent to collect data at any time. The lender will also be required to specify the reason for data collection, how it will be stored and how it will be shared.

Another important requirement is that of a mandatory Key Fact Statement (KFS), which is to be provided to the consumer prior to their acceptance of any loan product. It is a fact sheet that lists the total borrowing cost, thereby allowing consumers to make informed decisions.

New Rules for Digital Banking Services

From January 1, 2026, online and mobile channels for banks will be regulated according to the RBI’s Digital Banking Channels Authorisation Directions, 2025. These rules apply to the onboarding and use of digital banking services across banks.

For customers, one important aspect is that a bank must secure prior consent before registering or deregistering a customer for any form of digital banking services. A customer cannot, under any circumstances, be forced to use a digital bank as a prerequisite for accessing any banking products or services offered by a bank. A bank must also provide a customer with clear information concerning notifications associated with digital services.

Under the framework, standards for governance, cybersecurity, and operational risk are also stipulated for the digital platforms of the banks. This is largely a technical process but is designed to reduce the risk of service outages, unauthorised transactions, and other issues that impact bank customers.

Number Series for Official Bank Calls

TRAI has directed the adoption of the ‘1600’ numbering series for all commercial banks regarding service and transactional calls from January 1, 2026. Other financial entities under the banking, financial services, and insurance sector will follow under their staggered deadlines in early 2026.

This will give customers a clear way to recognise genuine calls coming from the bank. Numbers beginning with 1600 will signify to the customers that the call is related to their transaction alerts, loan, or any type of account update.

Increased Emphasis on Grievance Redressal

Alongside these changes, regulatory attention remains focused on the handling of grievances within the framework for the Integrated Ombudsman. Although this mechanism is already functional, regulatory initiatives from 2026 are expected to encourage quicker resolution and lower pendency levels for customer complaints on banking and online issues.

For consumers, this will translate to more organised escalation and timely resolution of disputes related to loans, online transactions, and service delivery.