If you took an app based digital loan and regret it, the Reserve Bank rules give you a cooling off period in which you can exit the loan by repaying only the principal and the interest for the days you held the money, with no penalty. The one time processing fee may still be kept by the lender if it was disclosed upfront.
Quick answer: Under the RBI Digital Lending Directions, every digital loan must offer a cooling off, or look up, period during which you can exit by paying back the principal plus the proportionate annual percentage rate for that short period, without any penalty. Each lender sets the exact length in its board approved policy, but it cannot be less than one day. A processing fee disclosed in your Key Fact Statement can be retained.
The cooling off period is a short window right after disbursal. It is meant for exactly the situation where you take an instant loan and change your mind.
The rule book is the Reserve Bank of India (Digital Lending) Directions, 2025, notification RBI/2025-26/36, issued on 8 May 2025. It consolidates and expands the earlier digital lending guidelines that the RBI first issued in 2022, so the cooling off idea is not brand new, but the 2025 Directions bring it together and tighten it.
The Directions require every regulated lender, and the loan service providers and lending apps working for it, to give the borrower an explicit option to exit a digital loan during an initial cooling off period. Each lender fixes the exact length through its board approved policy, and that length cannot be less than one day.
Act quickly, because the window is short. Move as soon as you decide.
Some borrowers meet delay or pressure when they try to exit. Know your footing.
Real-life example. Kashvi Pathak took a ₹30,000 loan on a lending app late one evening for a purchase she then decided against. Her Key Fact Statement showed a cooling off period and an APR of 24 percent. The next morning she messaged support and emailed the lender that she was exiting within the cooling off period. She repaid ₹30,000 plus about ₹20 as one day of proportionate interest, and the lender retained the small processing fee that had been disclosed. No penalty was charged, and a week later her credit report showed the loan closed with a nil balance.
Each regulated lender sets it in its board approved policy, and it cannot be less than one day. Check the exact length in your Key Fact Statement.
The principal plus interest at the annual percentage rate for the days you held the money. No penalty applies. A one time processing fee can be kept only if it was disclosed in your Key Fact Statement.
The Reserve Bank of India (Digital Lending) Directions, 2025, notification RBI/2025-26/36 dated 8 May 2025, which consolidate and expand the earlier 2022 digital lending guidelines.
No. Exiting within the cooling off period cannot attract an early exit or foreclosure penalty. You only pay principal and proportionate interest, plus any disclosed processing fee.
It is the standardised summary a digital lender must give you before you borrow, showing the APR, all charges, the cooling off period, and the recovery details. Keep it, because your exit calculation is based on it.
Complain in writing to the lender grievance officer, and if it is not resolved in 30 days, approach the RBI ombudsman. First confirm the app belongs to a regulated lender, because unregistered apps are a separate risk.
It applies to digital loans of RBI regulated entities and the apps working for them. An app that is not linked to a regulated lender may be operating illegally, which is why you should verify it before borrowing.
Repaying in full within the window and getting a closure confirmation should leave a clean record. Check your credit report afterwards and dispute any wrong running or overdue entry.