DBS Bank India waives loan prepayment, foreclosure charges for MSMEs

In a major step to give small businesses more financial flexibility, DBS Bank India (DBIL) on Friday announced that it will no longer charge prepayment or foreclosure fees on loans taken by Micro, Small, and Medium Enterprises (MSMEs).

The announcement, made on MSME Day, applies to all new and existing borrowers who are registered with the government’s UDYAM portal.

With this move, DBS becomes one of the first banks in India to remove these charges for all MSMEs, making it easier for businesses to manage their cash flow right away.

Enhancing credit agility for MSMEs

"Access to flexible and affordable credit remains a critical need for micro, small and medium enterprises. By waiving prepayment and foreclosure charges, we are addressing a common challenge that often limits financial agility," said Sudarshan Chari, Managing Director and Head – SME Banking, DBS Bank India.

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Chari added that the change would allow businesses to repay loans early without penalty and redirect funds toward operational needs such as inventory, technology upgrades, or expansion efforts. "It aligns with our broader efforts to support MSMEs with need-based solutions that strengthen their resilience and unlock long-term growth," he noted.

Aligned with regulatory push for transparency

This move furthers a broader regulatory thrust aimed at making lending open to scrutiny and tied to borrowers' needs. MSMEs were, for a long time, subjected to exorbitant foreclosure charges that disincentivised them from settling loans prematurely or switching to a better loan product.

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By getting rid of these foreclosure charges, DBS Bank India is extending the array of services geared toward MSMEs, including the quick online current account opening, quick business loans, and award-winning foreign exchange services. Moreover, the bank offers API-based banking solutions for businesses to automate their work and quickly respond to market changes.

Through the use of its DBS IDEAL platform, a business can proceed with payables, cash flow, and tracking transactions in real time. Its interlink with Tally ERP also assists with accounting and eases financial tracking.

With almost 350 branches spread over 19 states, DBS Bank India stands to promote business growth with smart tech-based solutions tailored to suit its needs at every stage.