Good news for all individuals ,who have taken term loan on floating rates from commercial banks. RBI has released a notification dated 07.05.2014 ,in which all commercial banks has been directed not to charge foreclosure charges/ pre-payment penalties on all floating rate term loans sanctioned to individual borrowers, with immediate effect on prepayment of floating rate term loans. As per this notification ,above exemption is allowed only to individuals ,so banks may charge pre payment penalties from partnership firm ,corporate clients and other persons except individual.
Further this rule is applicable on all floating term loans like car loan , house loan , personal loan etc.
Yesterday RBI has released two other goods news ,which can be checked at the links given below
- No minimum balance charges on inoperative saving bank accounts
- Minor age above 10 can operate saving bank account independently
May 7, 2014
All Scheduled Commercial Banks
Levy of foreclosure charges/pre-payment penalty on Floating Rate Term Loans
Please refer to our circular DBOD. No. Dir.BC.107/13.03.00/2011-12 dated June 5, 2012 on ‘Home Loans- Levy of Fore-closure Charges/ Pre-payment Penalty’.
2. A reference is invited to Part B of the First Bi-monthly Monetary Policy Statement 2014-15 announced on April 1, 2014proposing certain measures for consumer protection. It was indicated that in the interest of their consumers, banks should consider allowing their borrowers the possibility of prepaying floating rate term loans without any penalty. Accordingly, it is advised that banks will not be permitted to charge foreclosure charges/ pre-payment penalties on all floating rate term loans sanctioned to individual borrowers, with immediate effect.