Foreclosure charges/ Pre-payment penalty banned

RBI has vide its circular dated 7th May 2014 immediately banned the foreclosure charges/ pre-payment penalty that was being levied by banks and financial institutions on pre-payment of loans by borrowers. This will be brought into effect immediately but will cover only loans with floating rate of interest and that too only for individual borrowers. 

Not clear why RBI has left our the fixed interest rate borrowers and commercial entities who borrow monies. 

It is a case of too little, too late from RBI. 

RBI should levy a fine of a few thousand crores on all the banks and financial institutions who have been levying these charges on borrowers for all these years and reimburse to the borrowers who have been so effected. 

The copy of the circular can be found here. 

http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=8868&Mode=0

 

 

 

Leave a comment

Filed under Uncategorized

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s