Prepayment of the emi of o/s loan
pooja dedhia
(Querist) 19 April 2012
This query is : Resolved
what is the meaning of the financial institution.?
when there will be prepayment of emi to the bank for the outstanding balance and penal of 2% is levied if same prepayment supported by other banks or any financial instituation.
query:-
but if finance is provided through the broker ,
is penal provision is applicable?
ajay sethi
(Expert) 19 April 2012
banks generally levy 2%prepayment penalty . you can transfer loan to other bank but your bank will charge you penalty
Raj Kumar Makkad
(Expert) 20 April 2012
Prepayment penalty has ended now since 10 April 2012 so if any bank charge such amount, make complaint directly to RBI.
RAJU O.F.,
(Expert) 20 April 2012
'Financial Institution' is defined in Sec. 2(m) of SARFAESI Act,2002, Sec.4-A of Companies Act,1956, Sec.2(h) of DRT Act,1993, etc.
Recently RBI has directed Banks not to charge any penal charges for preclosure of loans, so that loans at higher rate of interest can be closed and fresh loan at lower rate can be availed of.
C. P. CHUGH
(Expert) 22 April 2012
I differ with Makkad ji,
Pooja has not clarified whether it is home loan or vehicle or some other loan.
The concession is for Home Loans only and not for all kind of Loans.
RBI Governor while announcing Monetary Policy observed as under :
"81. The Damodaran Committee had observed that foreclosure charges levied by banks on prepayment of home loans were resented upon by home loan borrowers across the board, especially since banks were found to be hesitant in passing on the benefits of lower interest rates to the existing borrowers in a falling interest rate scenario. As such, foreclosure charges are seen as a restrictive practice deterring the borrowers from switching over to cheaper available source.
82. It is felt that the removal of foreclosure charges/prepayment penalty on home loans will lead to a reduction in the discrimination between existing and new borrowers and the competition among banks will result in finer pricing of home loans with the floating rate. Though many banks have, in the recent past, voluntarily abolished the pre-payment penalties on their floating rate home loans, there is a need for ensuring uniformity across the banking system in this regard. Accordingly, it is proposed:
not to permit banks to levy foreclosure charges/pre-payment penalties on home loans on a floating interest rate basis.
83. Detailed guidelines in this regard will be issued separately."
