A recent press report said that National Housing Bank seems to be in agreement with the stance taken by Reserve Bank of India that prepayment penalty on floating rate home loans be removed.
Reports said that NHB was planning to soon come up with directives which will instruct housing finance companies (HFCs) to give up prepayment penalties from such loan types.
Mr. R. Verma, chairman and managing director, NHB said that it has planned to bring guidelines to remove prepayment penalties on all account. He said that there has to be a level playing ground for borrowers at large.
Reports said that the HFCs were not charging any pre closure penalty from the borrowers in case they were prepaying the loan with their own money. The borrowers will have to pay pre closure penalty only if the money is borrowed from some other lender. Now the NHB’s directives will be instructing them to waive penalties even if the customer precloses the loan with money borrowed from some other lender.
Mr. Verma said that the matter has been discussed with HFCs and that it has been planned to encourage all HFCs to take in the practice relating to customers.