A recent press report said that NHB has said that it will soon come out with a directive to abolish penalty on pre-payment of floating loans.
Mr. R. V. Verma, Chairman and Managing Director, NHB, said that it has planned to issue a circular for doing away with pre-payment charges levied by housing finance companies. HE said that the housing finance companies should not levy any pre-payment charges on floating loans.
He added saying that there should not be any penalty if pre-closure of housing loans is made out of the borrowers own sources.
NHB has told the press that the issue of levying pre-payment penalty or pre-payment charges by housing finance companies on pre closure of housing loans by the borrowers out of their own sources has been considered by the National Housing Bank and it has been decided that housing finance companies should not charge prepayment levy or penalty in such cases.
Reports said that the Reserve Bank of India (RBI) has also unsettled the idea of doing away with the pre-payment charges imposed by banks on floating home loan.
NHB has raised the provisioning requirement for doubtful assets of up to 100 per cent. At the same time, it directed HFCs, to set aside 0.4 per cent of the total outstanding “standard” loans as a buffer.