A recent press report said that National Housing Bank (NHB) has announced that it will come up with directives regarding prepayment of home loans by borrowers. Banks do not charge prepayment penalty if the borrower prepays the loan from his own funds. The borrower will have to pay prepayment charges if he prepays the loan by borrowing another loan.
Reports said that NHB which is the umbrella body governing most of the housing finance companies (HFCs) has not taken a firm decision as to prepayment penalty should be totally removed in the above situation or not.
Mr. R V Verma, CMD of NHB, said that they were looking into the situation of commercial refinance. He said the guidelines or a circular will be given regarding the issue. He also said that the NHB was co-ordinating with the RBI in order to come up with norms that could be uniformly applicable to the entire housing finance industry.
Reports also said that HFCs comes under NHB, as all banks in India are under the regulation of the Reserve Bank of India.