A recent press report said that National housing Bank has asked the housing financing companies not to levy penalties on pre-closure of loans, subjected to certain situations. The bank which regulates and supervise the housing finance companies, has directed all housing finance companies to maintain the consistent in floating rate interest for both old and new customers to ensure the transparency and fairness in the home loan segments.
NHB said that floating interest rate home loans can be pre-closed through borrowing from a bank or Housing finance companies or non-banking finance company or a financial institution whereas fixed interest home loan can be pre-closed only from the borrowers own sources.
Mr. R. V. Verma, chairman and managing director, NHB said that the changes made in the policy of floating interest rate home loans to seek the efficiency in the market of home loan also to allow the borrowers to choose the lower interest rate loans.
Mr. Verma believed that the adoption of new norms in the banking sector would lead to transparency and uniformity in the home loan rates. Mr. K. Unnikrishnan, Deputy Chief Executive, Indian banks’ association asked the housing finance banks to submit the feedback report to the Reserve Bank of India regarding the changes made in the interest rate and pre-payment penalty on the home loan products.