Penalty Charges are fees imposed by banks or financial institutions when a customer fails to meet specific terms or conditions, such as late payments or rule violations.
Penalty Charges are applied when customers do not comply with agreed financial terms, like missing EMI payments, maintaining minimum balance, or exceeding credit limits.
Banks impose these charges to discourage defaults and ensure discipline. In India, such practices are guided by the Reserve Bank of India.
"If you miss your credit card payment due date, the bank may charge a late fee as a penalty"