Loan to ‘Sole Proprietorship’ not ‘Individual Borrowing’ according to RBI Guidelines: NCDRC

The National Consumer Disputes Redressal Commission (NCDRC) clarified that a loan provided to a sole proprietorship is not considered an individual borrowing under RBI guidelines. The clarification came in a case where a lender sought to classify a business loan as personal borrowing. The NCDRC rejected this claim, emphasizing that the loan was for business purposes and should be treated accordingly under banking regulations. This ruling provides clarity for financial institutions dealing with loans to sole proprietors.