Are there consumer protection laws applicable to business loans?

Although consumer protection legislation typically applies to the borrowing of individual consumers, many regulatory measures and protections also apply to business loan borrowers - especially under digital lending. However, the Reserve Bank of India (RBI) has addressed this situation by implementing important steps to institutionalize transparency, fairness and accountability in business lending.

Business loan borrowers will have some protections including:

• Availability of information about all of the loan's terms, fees and charges before the borrower accepts a loan.
• Borrowers will receive a cooling-off period where they can exit without penalty within a specified time.
• Requirements for data privacy and security that protect borrower data.
• Grievance redressal remedies to address any disputes with lenders or others involved in the service provided.
• Prohibition against asset-based lending and unfair recovery practices.
• The consumer protection regulations apply to a lending environment that embodies fairness and transparency in representing the interest of business borrowers. Business loans may not be covered under the same consumer protection laws as personal loans.

While business loans may not be covered by the Consumer Protection Act as the borrowers are engaged in activities that generate profits for the borrower. Business borrowers are subject to regulations established through the guidelines and rules that create an environment where lenders are dedicated to transparency and fair practices. The RBIs Digital Lending Directions issued in 2025 required regulated entities to ensure borrowers electronically receive clearly documented, digitally signed loan terms along with appropriate grievance redress services. Data protection legislation obligated businesses to ensure that the collection of personal information protects the borrower's information along with an obligation to obtain express consent for data collection and processing.