Don’t fine floating loan prepayments, says RBI
May 08, 2014
Source : The Times of India

 

MUMBAI: Providing relief to borrowers, the Reserve Bank of India (RBI) on Wednesday directed banks not to levy any penalty on individual borrowers for prepaying floating loans.

"It is advised that banks will not be permitted to charge foreclosure charges or prepayment penalties on all floating rate term loans sanctioned to individual borrowers, with immediate effect," the RBI said in a notification.

Floating loan products include housing, corporate, vehicle and personal loans. Some banks still charge prepayment penalty of up to 2% of the outstanding loans. Two years ago, RBI had barred banks from levying foreclosure charges on home loans on floating interest rate basis.

 

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