A recent press report said that the National Housing Bank (NHB) has planned to take a decision on whether there will be a complete on floating-rate home loan.
According to Mr. R. V. Verma, NHB chairman and managing director told the press that the decision will be in the best interest of the borrowers. He also said that borrowers should exercise the option of pre- paying their loans, he did not mention if the pre-payment charges would be banned.
Reports said that the RBI has recently issued an advisory that banks should waive pre-payment charges on floating-rate home loans but the NHB will be responsible to make decisions for housing finance companies.
Mr. Deepak Parekh, Chairman, Housing Development Finance Corporation has opposed the RBI’s proposal on a complete waiver. He said that the pre-payment charges were a source of income for the banks, and these should not be stopped.
He also said that the RBI has to understand that there may be greater ‘substitutional’ housing finance and not ‘incremental’ housing finance taking place, if prepayment charges were completely waived.