Prepayment Charges abolished by RBI

This is a little old news. RBI has finally abolished Prepayment charges or penalty on home loans with floating interest rates. Borrowers can now transfer to new lender which provides them less interest rates without paying any kind of charges or penalty. Damodaran Committee on customer service in banks, RBI) has been observed that banks have been unfair in asking for charges when home loan borrowers want to switch to some other lender with lesser interest rates. Now if you prepay the loan from your own sources or through another lender, you only pay the outstanding loan amount.

Here are the excerpts from the circuler from RBI on abolistion of fore-closure charges/pre-payment penalty

2. In this context, attention is invited to paragraphs 81 to 83 of the Monetary Policy Statement 2012-13 announced on April 17, 2012 with regard to home loans on floating interest rates. The Committee on Customer Service in Banks (Chairman: M. Damodaran) had observed that foreclosure charges levied by banks on prepayment of home loans are 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.

3. The removal of foreclosure charges/prepayment penalty on home loans will lead to reduction in the discrimination between existing and new borrowers and competition among banks will result in finer pricing of the floating rate home loans. Though many banks have in the recent past voluntarily abolished pre-payment penalties on floating rate home loans, there is a need to ensure uniformity across the banking system. It has, therefore, been decided that banks will not be permitted to charge foreclosure charges/pre-payment penalties on home loans on floating interest rate basis, with immediate effect.

Prepayment Charges removal will help !

This new rule will surely be taken in good spirit by borrowers and end the discrimination done by banks between old and new customers. This will also make sure that the interest rates become more competitive in the overall system.

Have you prepaid your home loan just some time back with charges ? Are you going to prepay the loan soon after this Prepayment Charges removal ? What are your thoughts about this new circular !

228 CommentsAdd Comment

  1. Nagarajan

    Hi Manish …

    Good to hear :)

    I have a plan to prepay my ICICI home loan. But I want to know ICICI implemented this rule or not ?

    I am not receiving any communication regarding this from ICICI.

    Thanks and Regards
    Nagarajan Santhan

  2. Mukesh

    Although very late, this move has finally taken shape. I ended up paying INR 24000 to foreclose my ICICI home loan in 2009.

  3. Ankur

    I availed home loan last month and also prepaid around 25% of the principal (made some frugal choices recently) just after 1st EMI. It has reduced my 180- months tenure to 99 months…I also chose to keep the EMI same to route a significant part of EMI towards prepayment. Now I hope to close this loan in 1 yr time!!!!!

    Thanks to Manish for his excellent articles on home loan which has increased my awareness rightly!

      • Ankur

        Thanks Manish. Would like to share with readers, for awareness, that HDFC has following clauses for prepayment:
        1. You can can make only 1 prepayment in a month (although you can provide multiple cheques from different accounts).
        2. The prepayment amount should be more than twice your EMI
        3. You need to provide 6 months bank statement as a proof towards source of prepayment
        4. There are absolutely no prepayment charges

  4. Abhinav Gulechha

    Hi Manish

    Thanks. This is a welcome move for customers and put an end to the debate. However 2 points:

    a) From the text of circular, its abolished for only floating rate loans. Thus, those under fixed rate loans stay put as per bank’s prevailing T&Cs
    b) This is a circular by RBI to banks. What about loans taken from home finance companies like HDFC etc. – Has National Housing Bank come up with a similar very clear directive? Else I have noted that divergent practices followed by NBFCs will continue.

    Abhinav

  5. Ramesh

    Hi
    I saw in TOI that if there was a fixed rate earlier at the time of sanction and first disbursement and then the loan was changed to Floating rate then this is not applicable and thus Banks can still charge for pre payment of loan for such type of loans. How true is this.

  6. prabe

    I just hope NFBC under whom HDFC ,LIC and other come under issue a similar order so it will be easier for all.

  7. Pandaba Kumar Singh

    Mr Manish Good afternoon,

    Very well suggestion u r giving and this is most well come ,but one thing when u r giving valuable idea to any customer plz advice them to share among his/her friends/relatives for better knowledge and it should be popularized in rural area also where % of knowledge regarding banking ideas is very poor.

    thanking u
    P.K.Singh

      • Pandaba Kumar Singh

        Good evening Mr.Manish,

        Thank u for ur reply & I m very much impressed on your reply,plz advice me how i will be able to serve for the poor people of our country as u know very well that most of the Indian people are living under below poverty line,how they will be benifitted as survival is too difficult in rural area ,plz do some thing for them,thanking you.

        P K Singh

  8. Sudarshan

    I have taken Home Loan in HDFC only… There is no prepayment charges (took the loan few months back only).

  9. Muthu

    AXIS Bank doesn’t collect any pre-closure charge for any type of loan inlcuding Personal Loan. I have borrowed 3lakhs from AXIS and paid a part of amount few days back and i didn’t pay any pre closure charge.

  10. Muthu

    “home finance companies like HDFC” – what does home finance company means to? Is it that such banks will not strict to RBI’s policy and rules? Can anyone please help me out here.

  11. Chetan Pujara

    Hi Manish,

    It is really a boon for Home Loan borrowers like us.. Infact I use to prepay small amount of money fapart from the regular EMI and LIC used to charge 2% penalty every month on month… Atleast I am Happy finally RBI has taken a correct decision. I will start making Prepayment on the principle again. Thanks for the Info…

  12. anita

    hi, I had taken a loan from india bulls, Rs, 40=Lac for 120 month, emi will start from 1-4-2013, when i aply , Jan, 2010 the intrest rates was @8=25% , but india bulls not send me sensetion letter, only a letter in this letter 10.25% rate of intrest , so now i want finesh this loan , what i will do , pls help me

  13. Ritesh Kumar Singh

    Hi Manish,
    Thanks for a good article once again !
    just wanted share with all the readers that I had just prepaid my Home loan around 2 months back with axis bank and there was no prepayment charges for same. though there were couple of rounds to the bank (Axis Bank retail centre) but the process was smooth and i have got the papers after 1 month also. The customer care was quite supportive during the entire process.
    I had prepaid the Home Loan as my floating rate was 12% and no sign of reducing, though I assume new loans are being provided at 10.25% by same bank.
    Thanks,
    ritesh

    • shobha

      Hi,

      Yes, even I had a Home Loan with Axis and have been Prepaying and finally foreclosed it last week without any extra charges.

      The entire process is very smooth and without any Hiccups with constant Msg’s and Mails from their side on loan status, outstanding and so on.

      Only thing, I missed from Axis bank was, that I needed to Physically Visit them every time. If it was online like SBI and some other banks, it would have been Perfect.

      Regards
      Shobha

  14. vijay

    Hi,

    I have a PPF account with SBI opened few years ( 5yrs ) ago made some investment for 1 lacs and i did not make any further investments after that.. will the account be active?.. i read in this blog which says RS500 has to be made every year for the ppf to be active. can someone recommend if i need to continue with the same ppf account or can i open a new one in ICICI which gives me the option to investet ppf online.is it okay if the same person hold two diffrent ppf accounts?

      • vijay

        Hi Manish.

        Thanks for the reply. is 3k is a penalty or will it be added to my existing PPF account? i came to know that 500Rs is required to make the account active only now from ur website. Thanks for all ur posts.

        Vijay

  15. Rashmi

    This is a good move but sadly, it does not apply to teaser rate loans, wherein a fixed home loan interest rate is offered for first few years later converted to floating rate.

    I know for sure in case of Housing Finance companies like HDFC that are governed by National Housing Board. The NHB circular dated 4-4-12 (which circular is also available on NHB website) clearly says that in case of dual rate loans, only if the prepayment is from own sources, will the prepayment charges not apply. In case one wishes to foreclose the loan by switching to another bank, the prepayment charges will be applicable. Happened in my case (dual rate / teaser loan) wherein a huge prepayment penalty detered me from switching to another bank.

    Rashmi

  16. Kamalakar

    I also Wanto to know About Charges HDFC taking To chg Interest rate For Existing To lower One interest (Interest changing as per market )
    Is there any Circular Regarding This

  17. Irshad

    Hi,

    My current loan from Axis is @12% floating ROI.
    I got 2 options now but a bit confused which one to go for

    1. Option1 : Pay Axis bank around 10K & bring down the ROI to 10.75
    2. Option2 : get my loan transferred to other bank. (Although Axis doesn’t charges any penalty on foreclosure but only if its self paid & not transfer, but considering recent RBI orders, they might not charge for transfer either. Any idea guys ?? )

  18. Satish K

    Hi Manish,

    I have a loan with ICICI Bank on fixed rate of interest. As pointed by you (or some other member), they are charging a 2% penalty on foreclosure of the loan for fixed rate of interest. However, as per the NHB guidelines, they should not charge the same if the loan is being closed out using my own sources and if I am not taking any help from any financial institution. When I presented the NHB circular to them, they claimed that the NHB circular is applicable only to Housing Finance Corporations and not to banks. Since my loan is from ICICI bank, they say that I will have to pay the 2% penalty (which comes to almost 50,000 Rs). I am totally miffed by this and wanted some expert opinion on this. Can you please share your thoughts.

    Thanks
    Satish

    • Umesh

      Hi Satish,
      I have just foreclosed my loan with ICICI bank with no prepayment/foreclosure charges.
      I realy found the experience hasslefree and pleasant(wasn’t expecting!), as I had to go just once to my nearest branch and collected all documents within 4-5 days from the same branch.
      The rate was floating at 11.5% after march’12(till then it was under 2 year fixed rate).
      May be you can try first converting your fixed loan to floating and then foreclose. Nowadays banks offer more of floating rates and shy away from offering fixed rastes, so they may charge a little or nothing for this conversion.

      Good luck.
      Umesh

  19. Satish K

    Thanks for the response – Umesh and Manish.

    I am already pursuing converting the loan from fixed to floating – hope that goes smoothly.

    Regards,
    Satish

  20. Deepak Arora

    Hey Manish,
    Many Thanks for this forum.

    I have a home loan from HDFC, if I get or borrow some amount from my cousin and use it to foreclose would that be chargeable.

    Regards,
    Deepak

    • I guess yes , prepayment is FREE only if you pay from your own resourses. Dont tell bank that you took it from your cousin, just ask your cousin to transfer to your bank and later you repay him

  21. abhijit

    I have taken an housing loan of Rs. 700000/- i have paid my premuims for three years. @13.75%. my total outstanding dues is Rs.675000/- if i pays my total outstanding dues…how much amount i have to pay?
    will interest @13.75% would be chargeble on total dues…or any penalty i have to pay?

  22. ramesh

    Hi. I just wanted to know. I have home loan of 130000 and I have taken this loan two years back when interest rate was 8.25%. But now it has increased to 11.75%. Bank has given an option to conversion of interest rate of 10.25% with converstion fee of around 7500, which is presently given to new home loan customers.Can some one suggest me is it better to go with it or not.

  23. S.Prakash

    Dear Manish,

    I have taken a Housing loan of Rs. 7,65,000/- from LIC Housing finance 4 years ago. Now my outstanding loan amount is 5,30,000. The loan will terminate in 2021. I have invested around 6 lackhs in FDs. I am in 20% tax bracket. Is it wise to repay(prepay) the entire loan amount of Rs. 5,30,000/- and close the loan account or continue the EMI Payment of Rs. 8713/- pm. Kindly advise.

    regards,

  24. siddharth

    I have taken 21,00,000 Home loan (floating interest rate) and 20,00,000 loan against property on floating interest rate for construction of my house. I want to shift the loan to other bank for which IDBI Bank is charging me 2% each as prepayment penalty + service tax . Kindly guide me

  25. Sunil Bhatt

    Hi Manish,
    I have taken a loan of 6,50,000 from Syndicate Bank in August 2005, with an EMI of 6500 for 20 years. Interest at that time was 7.75 or 8%, floating. It is almost 7 years to pay Rs. 6500 montly and when I recently checked the outstanding amount by statement, it is showing 5,80,000 more to be paid as I want to make a prepayment. It is shocking that I just paid 80,000 for the last 7 years. What should I do in this case, please guide me.

    Thanks and Regards,

    • Sunil

      thats how it works . in long term loans, in the starting year , your EMI contains much of interest and not principle ! , there is nothing wrong from bank side, thats the reality !

    • Sudheer Bhat

      Hi Sunil,

      What you can do is to do a part payment to your loan. If you have ready cash say 1-2 lakhs in savings with you which you do not intend to use in near future, you can pay towards the loan. The outstanding principal will be reduced as well as the loan term and interest. You can also increase the EMI amount if you have the ability to do so.

      I have done this for my home loan taken from ICICI.

      Thanks,
      Sudheer Bhat

  26. sajad

    i had taken personal loan 3 lac from hdfc bank with int 13% and Emi of 10500 per month.Now after 5 months i want to pay the loan amount back .Whether i have to pay interest of 5 months or more

  27. Kashinath Vajpai

    Dear Manish: I am impressed with the kind of responses are coming from you to the people asking about HL. I have following inquiries :

    1. I have a Housing Loan of 27 L from HDFC as Adjustable Rate Home Loan on floating interest. The EMI will start from this month end (30 Sep 2012). I wish to go for a pre-payment of about 8-9 L during Nov 2012. Will HDFC charge me for pre-payment in any manner. Is there any clause like 3 months of EMI should be paid first.
    2. What is Adjustable Rate Home Loan (ARHL) and Accelerated Repayment Schedule (ARS)? Any clue about them and in my case can I switch to ARS in case needed to go for major re-payment schedules.
    3. When the HDFC asks for bank statement, what does it means? The source of income from where the pre-payment is coming? And how important is this?

    I appreciate your response on these.

    Thank you so much for your time and best regards.

  28. Swastik Sant

    I would like to know if prepayment premium has to be paid for a loan whihc was settled prior to this notification by the RBI. is the present notification by RBI on prepayment premium prospective or retrospective. Please give me correct legal View

  29. Vivek

    Dear Manish,

    I have taken a loan from HDFC IN 2009, which is now at floating rate of 10.75%. I want to part prepay the loan from my PF.

    In such case will bank charge prepayment penalty.

  30. Richard

    i had taken personal loan 2 lac (5yrs EMI) from hdfc bank with int 14% and Emi of 5106 per month. Now after 6 months went i contact the bank for preclosure bank asking to waiting till 12 months to do the preclosure. What is the guidelines for minimum period for EMI to be paid for preclosure.

  31. Abhijeet

    Hi Manish,

    I have a residential land which my parents had bought and it is registered on my name. And, I also have a home loan running on floating rate.
    Can I sell the residential land and prepay my home loan?
    Do you have any idea, what are the tax implications etc. if I do so?

  32. Chandi Prasad

    Hi Manish,

    I m going to take home loan from India bulls that is rite now interest rate 10.25 for 2500000.
    Now my question is that in future how they increase the interest rates. for example: they have 2 slabs that is upto 2500000 – 10.25 and above 2500000 lakhs 10.75.
    a)If RBI increase or decrease the interest rates how India bulls increase or decreases interest rates…?
    1)suppose to increase 0.25.
    2)they will increase 10.25+0.25 = 10.50 for upto 25 lakhs slab
    3)and 10.75+0.25 = 11.00 for above 25 lakhs slab?
    Please help me out?
    Thanks in advance.

    Thanks
    Chandi Prasad
    8904416139

  33. Chandi Prasad

    is they maintain the slabs for full tenor?
    Or they combained both slabs and increase the rates in remaining tenor?
    or India bull will decide on customer to customer variation interest rates?

  34. G.C.Jayakumar

    Sir I Have taken a home loan from karnataka bank based on first year fixed and following 14 year on floating charge basis.Now I Am planning to tansfer my loan to another bank namely SBI so now karnataka bank is asking me to pay a sum of 1% on the loan amount as take over charges.Now i want to know whether there is any kind of rules such as to pay 1% penalty as take over charges to karnataka bank if there is any rules kindly give me information specifically as soon as possible.(if you send me email it is better)

  35. Inder

    I have a land loan with HDFC. Earlier whenever i used to repay no charges were applied but this time they charged 2% extra citing land loan. Does RBI no prepayment charges does not apply in this case.

    • Karthik

      Hi Inder /Manish
      I also wanted to clarify on the same , does te RBI norms apply to Land loan or only to housing loan. Some bankers claim that in the sanction letter they give as 0% pre-closure charges for housing loan( even though you avail only land loan) .But at the time of pre-closure they charge 2% on the outstanding it seems.Please clarify this point especially with Axis bank

    • Karthik

      Hi Inder and Manish,
      I have the same clarification . as per RBI norms is there any pre-closure charges to the land loan or the 0% pre-closure is applicable only for the home loans? Axis banks states they would mention as 0% charges on pre-closure of housing loan in the sanction letter (altough you apply for Land loan) at the time of closure they might charge 2% citing that clause is applicable only for housing loan and would continue to charge 2%. Please clarify.

      Also what is the meaning of pre-closure – does it include part payments as well or only full closure of the loan before the tenure?
      meaning if I take 40 lakhs for 10 yrs and I part-pay 10 lakhs after 1 st year can will they charge 2% on the balance 30 lakhs ? and after 6 months i pay another 5 lakhs , they charge again 2% of banalce 25 lakhs ? how does this pre-closure or part payment works … please clarify..

  36. Phani M

    I am trying to closing an LICHFL home-loan and I find that the foreclosure and handover of documents will take 1 to 2 months. Anybody knows if this is a normal delay? I wonder if this is the bank’s way of circumventing and/or protesting RBI’s ban of forclosure surcharge. The delay in documents delivery means that I cannot complete a sale nor get the sale-proceeds. Effectively, I lose the interest on the amount generated from sale.

  37. KC Choudhury

    Sir,
    I had taken home loan from LIC Housing Financial Ltd in January,2012. Now I have decided to take over the entire loan amount by SBI. LICHFL is intimating the outstanding amount including the pre-closure charge of Rs.30000. Whether RBI guidelines are applicable to LICHFL wherein pre-closure charges have abolished from 5/6/2012
    Thanking you

    Yours faithfully
    KC Choudhury

  38. Mujibur

    Hi Manish,
    I am going to take home loan, please tell me which bank is giving less interest as well no preclosure charge

    Thanks,
    Mujib

  39. Divya

    Hello Sir,
    I have a loan from HDFC bank, loan amount is 50 lakh and emi is going around 56,000 and for 15 years.
    Now at present loan amount 39 lakh is remaining.
    I want to reduce my EMI and at the same time Increase the no. of years.
    Is it possible.
    Please advice me

  40. Shirish

    Hi,
    thanks, for the article. How soon can the pre-payment be done after the EMI starts? eg. i have a loan from LIC whose EMI started from Mar’12. Can I prepay some amount now? or do i have to wait for some period.

    Thanks

  41. Anil

    Hi,
    Is this rule (No pre closure charges) applicable to Personal Loans?
    HDFC is saying that there is a pre closure charges of 4% on personal loans.

    Please advice.

    Thanks
    Anil

  42. kartik

    hi manish
    i took housing loan from hsbc bank for 74 lakhs on june 2005 for 7 % and i have repaid 7800000 and the outstanding principal is 6850000 and my account is became npa and even after that i paid 1500000 in september now is given a public notice for sale . what to do now

  43. Rishu Vyas

    Dear manish,
    I availed a lap at 13% floating as per agreement but am being charged at 13.5% as of now, which i realised after an year. Now I dont feel comfortable with this NBFC and want to forclosure the loan but as per agreement they charge 5% . I want to close because they have not dealt fairly. What should I do? The foreclosure amount is large but the nbfc has made a mistake.
    Please advise.
    Regards,
    Rishu Vyas

  44. Deb

    Dear Mr. Manish,
    I had some bad credit card history sometime in 2007-08, I had some 6 credit cards with me out of which I had settled 2 of them after negotiation with bank and rest 3 are closed normally paying all pending dues. Now, for the last 4 years, I am having only 1 credit card which is of SBI and I have totally clear record for that using this card for last 5 years. In CIBIL, my score is 744 out of 900 currently and I am trying for a home loan.

    I have recently applied in HDFC & LIC, they both have rejected my loan application based on past credit history whereas I dont have any liability currently. My salary is more than 6 times the EMI payable and I have a stable job, more than 5 years in the present organisation.

    I dont know what to do now. Where to apply for home loan? I have applied in FIRST BLUE HOME FINANCE LTD and they are saying that they can provide me loan. But, I am not sure whether it will be good to take loan from FIRST BLUE HOME FINANCE LTD. I am in deep trouble and confused. Can someone please help? Also, is FIRST BLUE HOME FINANCE LTD governed by RBI guidelines?

    Thanks.
    Deb.

    • Deb

      Your past credit history is to be blamed here , you will need to clear the outstanding about of those “settled” loans first and over some months, your score should improve. Did you apply for your report ?

  45. Murali Krishnan

    Dear Mr. Manis,

    Whether Prepayment Charges abolished for old loans also. I have taken my home loan from a psu bank 2 yrs back (floating interest rate based on bank’s BASE RATE). Now i am trying to switch the loan to SBI which is 1.10% lower than by current interest rate (from next year the difference will be 1.35%).Considering my loan amount of 4o lakhs, this will be huge saving. But the bank is not cooperating me in the process. The bank guys not even willing to give the pre-closure letter which is base document for shifting my loan. Also the manager says that there will be prepayment charges since the RBI rule is for only new loan and my loan sanction letter has mentioned the prepayment penalty as 0.5 %. Does the prepayment charges clause mentioned in loan sanction letter is still valid ?.Please guide me how should proceed in this case ?. Your comments will be helpful to me.

  46. Neerja Singh

    Dear Manish
    I have taken apersonal loan of 4,00,000 from standard chartered bank in Nov. 2011 for 3 yrs. At that time when we asked for foreclosure charges they told that right now it is 4% but soon RBI is going to abolish these charges and that will be applicable in our case too as well but as per that time guidelines, bank mentioned 4% foreclosure charges in agreement. Now, when we called the customer care of bank to foreclose the loan in January they said that foreclosure charges are abolished only for home loans. We have to pay remaining principle(P)+4% of P (I)+12.36% of I in total to make full and final payment. Can anybody help us? Please suggest. Thanks.

      • amol paygude

        dear manish sir,

        I have taken home loan from flutron india credit company at 15.5% for 20 years period, at 2012 now i have already paid 14 emis i want to transfer these loan to hdfc at 10.25% i have completed all process now flutron ask me forclosing charges are 4% which is too much i already explain them RBI rule they told me that it is not applicable to them,what to do inthis case as i alrady paid 5laks against intersest & only 20.000/- principle deducted.
        pl guide against these.

        waiting for ur reply.

        regards,

        Amol Paygude.
        9158884558

  47. Deepesh

    Hi Manish

    I have taken a home loan of 11 lakhs from hdfc on 2011.i am planning to prepay 2 lakhs now, i have one lakh in my account and my wife has one lakh in hers. should i have to pay 2% extra fine for the one lakh taken from my wife account?

  48. MS

    Dear Manish
    I have taken a home loan amount of 12 lacs from HDFC bank on ROI of 10.5. I want to transfer it form HDFC to ICICI bank…reason behind is not good customer service by Hdfc …& also offered better ROI from ICICI. as you informed us that RBI abolished Pre payment charges..so will this transfer will come under Circular of RBI? Because i am doing Pre-Payment by taken loan from ICICI & giving it to Hdfc. please let me confirm ..Am I think correctly ?

  49. chandrakant nalawade

    i have taken home loan of Rs.4,55,000/- from punjab & maharastra co op bank before 3 years. now they are charging ROI @ 11.25%, so i want to shift it to LIC hsg at 10.25%, but no any bank/FI is willing to transfer the co op bank’s loan, why? still this bank PMC, directed me to pay 2% prepayment charges on shifting even after RBI guidelines. Can some one tell me whether co-op banks are not attracting the RBI’s rules??????

  50. Adarsh

    Hello Manish,
    I have two queries
    a) Does RBI/NFB guideline no pre payment charges, applicable on LAP also, if loan is taken from NBFC
    b) I have taken LAP of 5000000 from IB, i want to increase its EMI but the company says it can’t be done as last year ITR does not support it, its strange for me as they were ready to give me a top up of 20 lac 6 months back
    Now nither they are letting me to migrate my loan nor they are ready to increase my EMI. Kindly guide me what should i do, As i have to wait for 2 long month to file my new ITR and my bank statements supports my extra earning from past 3 months

  51. Mahesh

    I have taken a homeloan of 33 lacs at 10.7 Fixed ROI from LICHFL. When I ask them to reduce my Interest Rate. They say that they cannot do it. When I ask the procedure for transferring my loan from LICHFL to SBI, they say that I need to pay Transfer Charges of 2% on the O/S Amt. Can you please me about the new rule which RBI has brought in about waving the transfer Charges? Also please tell me how would I contact RTI in case I need their help?

  52. Pankaj

    Hi Manish,
    I am planning to shift home loan from LIC to SBI.For that Builder is asking letter of consent and SBI wants forecloser letter from SBI. How much time will take by LIC to release letter of consent ?Without letter of consent builder is not agree to give NOC for SBI.

  53. Anil SV

    Hello Manish Sir,
    I have a Personal loan from HDFC bank, loan amount is 1,50,000 tenure for 48 months and have paid 8 months EMI 4446 rs. I am planning to close the outstanding amount now but HDFC bank is telling after 12 months only I can closed the loan with the 4% interest charges.

    please let me know what they are telling is correct as per RBI rules.

    thanks
    Anil S.V

  54. Rupesh

    Hi Manish,

    I have home loan from GIC at floating interest rate 10.5% however after 6 month they increased the interest rate to 12.5%, when I raised the concern they said 10.5 was the initial offer rate for first 6 months and later on it will be market rate which is 12.5 %.
    Can you please suggest what I need to do now.

    Thanks
    Rupesh

  55. Rajan madaan

    Dear Manish ji,
    Can you please tell me the date when the rule of abolish of “HOME LOAN FORECLOSURE CHARGES’ had been passed by the R.B.I.

  56. Prashant Bajpai

    Dear Manish,
    I have borrowed mortgage loan from LIC Housing Finance Ltd
    2 months back.I want to make prepayment of this loan.Please
    clarify when n how is it possible to make prepayment,is there
    any limitation n are there any prepayment charges n what it
    will be.
    Thanking You.

  57. mr patel

    i want to know about car laon forclouser charges. bank can charge forclouser charges?it is only for home loan or any other loan forclouser can levied by them

  58. Deepesh

    Hi Manish,

    I have taken 11 lakhs housing loan now i wish to pre pay 2 lakhs but the amount is in my wife account, Can i give my wife’s cheque if i do so should i pay penalty for the same? or shall i transfer to my account and pay it back?

  59. Atul Sachdev

    Can Bank Charge interest on home loan without physical disbursement of the loan amount. It means if the bank has prepared the demand draft on the seller name & the demand draft has not been issued to the seller due to cancellation of the deal. Can Bank still charge interest on the loan amount till the period cancellation request has been made without actual disbursement of the loan amount

  60. Siva kumar B.

    I have taken home loan of amount Rs.49,00,000 from LICHFL for term of 15 years on floating rate, but currently my ROI is 11.35% where as other banks are offering home loans for very less floating interest rates. So can I transfer my outstanding loan amount to some other bank which is offering home loan on less floating interest rate?
    Also please let me know if LIC would charge me the prepayment fees if the outstanding loan is taken over by other bank. And what other charges could be charged by LIC on me if there is a Loan take over by some other bank.

  61. subba rao

    Hi Manish,
    I would like to know some information. What is the best time to pay pre-payment? how much difference will come when pay earlier ( with in 2 to 3 years) and later( after 5 years). Actually, by having loan we can get tax benifit and Interest subsidy from the ecurrent employeer. by considering these components what is the best stratogy?

  62. Nandkishor

    Hi Manish!

    I have taken LAP from HSBC. if i have to repay the loan, will they charge penalty? and how much it will be.

  63. Karthick

    Hi Manish, Thanks for your expectional job helping to guys on doubts related to finaicial issues. I have few questions. I got a loan from LIC for 25lakhs and I made a part payment of Rs.1.5Lakh in Feb 2013 they have charaged Rs 4000 as Lumsump fee. As per the rule from RBI is it applicable? Need your guidence on this. Thanks

  64. ATS Preeth

    For HDFC Home Loan Customers :

    If you are in Floating Rate – There is no charges for
    – Foreclosure (from any sources – this includes Take Over from other banks also) and
    – Part Payment (minimum 3 EMI’s).

    Just to make things easier, all housing finance division coming under NHB, should NOT charge for foreclosure & part payment. Read the circular http://www.nhb.org.in/Regulation/pol%20cir-43.pdf

    But if you are in Fixed or Special Teaser rates, then charges apply :( .

    List of Housing Finance Companies coming under NHB … read this URL :

    http://www.nhb.org.in/Regulation/List-granted-Certificate-Registration.pdf

  65. anshu

    Hi Manish,
    I would like to know some information. Which home loan is better in all aspects…LIC HOUSING FINANCE OR HDFC HOME LOAN.?

  66. Krishnan

    Hi Manish,

    I have a floating rate home loan from First Blue, which has been taken over by DHFL. Since Jan 2014, they have increased the rate of my home loan. Therefore, a few days back, I went to make a part-prepayment on my loan and was told by my loan officer that I can make only 4 part-prepayments on my loan in a year. Last year, I had made similar part-prepayments and this was never communicated to me, nor was I charged as per my understanding. I was also under the impression that RBI has issued circulars to prevent such practices. Has there been a change in the laws? If not, what do I do if they start charging me for part-prepayment of my loan in future? Kindly advise.

      • Krishnan

        Then what about NHB’s under whom they function? Will they be in a position to address my grievance if DHFL decides to charge me for part-prepayment? Kindly advise.

      • Krishnan

        Thanks for your reply, Manish. As per your reply above, should I talk to DHFL or the governing body of NBFCs? And who is the governing body of DHFL? If I talk to DHFL, they will state that as per their rules, only 4 part-prepayments can be made in a year. Kindly tell me who I can speak or write to for clarifications on this issue. Thank you.

  67. Rashid Shaikh

    First of all thanks to Manishji for providing important guidance to us all.

    I had taken personal loan fron HDFC of Rs.247000/- & after deduction of processing fees, insurance they disbursed 239000/-, I ha already paid 14 EMI’s & now I want to close the loan by pre payment but as per their terms & conditions, i have to pay 8% as penalty on pre payment, IS penalty on personal is waived or % is reduced?

    Awaitng a quick reply.

  68. Lokesh

    Hi
    I have taken Home loan through GICHFL Rs.1200000/-for 180 months with rate of interest 12.45, and I have already paid (33 *14752/-) installment and processing charges @2% now I want to closed my loan account so request you to pls confirm what is the (Pre-payment charges) i have to pay ( Final amount ) .

  69. Javeed

    Hi Manish,

    I have personal loans in Axis bank and one in ICICI bank. I am currently outside the country and I want to pre close these loans. Can I transfer the money to respective Loan Accounts through Foreign Exchange and then raise foreclosure request. Will it work? If not whats the best procedure for me under this situation.

    Regards
    Javeed

  70. inderjit singh

    Dear sir,
    I have avail auto loan from ICICI Bank but at the time of preclosure of auto loan running at fixed rate of interest , bank charges prepayment penalty @ 5.618% on outstanding principal of Car loan. please refer us RBI Circular regarding waive of prepayment penalty.
    Regards
    Inderjit

  71. Jyoti Handa

    Dear Manish,

    I have taken SBI realty loan in 2010, which had a condition to start the construction in 2 years from loan sanction.
    All of a sudden , i received a call from SBI that since I have not started the construction in 2 years, they will put a penal interest rate for last 2 years and debited my loan account for the same. Is there a provision to get any relief or a waiver on the penal interest from SBI. My view is that they should charge prospective penal interest after the date they sent me the notice rather than retrospective for the period of SBI’s negligence to notice and charge me the penal interest of the past. Pls. advice. Thanks!

  72. rahul chawla

    Sir I am having loanagainst property from icici bank. I want to close my loan .bank has put preclosure charges of 4.44% . They say my company is co-guarantor in the loan so I have to pay foreclosure charges. Please help me on this.

  73. Srinivas

    Hi,

    A per the RBI Circular and Press Release on May 7th, No Bank/NBFCs should charge the Pre-Closure charges for Personal Loans.But banks are still charging the same.

    Can you please advice me Is RBI is putting the things in wrong direction or banks are avoiding the RBI decision?

    I suggest please go through the circular again and guide me whether this is applicable to personal loans or not.

    All media news papers showing its applicable to personal loans as well.

    Confused with these statements…

  74. Imraan.

    Hi dear,
    Actually I hv heard that all loan which is taken by an individual name. And won’t to foreclose the same. As per the new RBI/NHB s circular there will not be any foreclosure charges levied.. Is it right..?

  75. Murli

    Hi,
    I have taken a home loan from a nationalised bank,with floating interest rate in jan2013. Now I have pre -closed the loan by a takeover from HDFC.But the nationalised Bank is claiming 2% preclosure charges from me now since the loan was paid by HDFC ie., BANK TAKEOVER AND NOT FROM MY OWN SOURCES. kindly let me know what is RBI Guidlines on this ?Also in my Loan offer letter from nationalised Bank (in Jan2013)they have mentioned that i have to pay 2% on outstanding loan Amount in case of other banks taker over.Pl.let me know i have to pay this or not (Based on RBI Directive)
    Thanks
    Murli

  76. peri joga rao

    Hi,
    I have taken a home loan from a nationalised bank (United Bank of India), with floating interest rate in Feb.2013. Now I have pre -closed the loan by a takeover from ICICI.But the nationalised Bank is claiming 2% preclosure charges from me now since the loan was paid by ICICI ie., BANK TAKEOVER AND NOT FROM MY OWN SOURCES. kindly let me know what is RBI Guidlines on this ?Also in my Loan offer letter from nationalised Bank (in feb 2013)they have mentioned that i have to pay 2% on outstanding loan Amount in case of other banks taker over.Pl.let me know i have to pay this or not (Based on RBI Directive)
    Thanks
    Peri Joga Rao

  77. Hi
    My name is Manu Kammar, I have taken takeover car loan from HDFC bank, which is fixed rate interest of 16.75 %. Before getting loan I got call from HDFC sale executive saying that interest rate is 11% and that is floating rate interest but when loan got released interest rate raised 16.75% and fixed interest. I enquired to bank customer they did not help me because I do not have any proof, when bank sales executive approached me to take sign for loan documents I asked him its everything blank and bank sales executive told me that you sign here we will fill up everything by given data from my Id proofs. Even though bank has deducted pre closing loan but RBI has removed for pre penalty and moreover my car loan is not per closing its a takeover loan, Which I am continuing the loan earlier which existed another name. Bank officer is not approving my concern, could you help me regarding my worries.
    Here My concerned is they deducted high rate interest for pre closing penalty which is takeover loan.

  78. sanjay

    i want to transfer my home loan from icici bank to sbi but icici bank has charge foreclouser charges to me but forecloser charges is abolishe by rbi please guide me

  79. bhavesh bhatt

    dear sir,

    i have a car loan with fix intrest rate with HDFC bank. i had already paid 12 emi to bank. at present pending loan amount is Rs. 205000/ i wants to pay Rs. 50000/ as pre payment. HDFC people told me they charge penalty @5.25% + servicetax on the prepayment amount (rs.50000/-) . is this legally right ? i read somewhere,RBI had give guideline for not charge any penalty for prepayment.

    pls guide me & reply.

  80. vinaypal

    Hello Manish Ji
    I have taken a personal loan of 1 lac rs. from fullerton india credit co. (a nbfc) in 2014 for 3 yrs. At the time of taking loan they told me rate of interest is 18% as flat rate of interest. They did not give me sanction letter, loan repayment schedule and loan agreement. Now i want to foreclose this loan. when i talked about the executives for closing the loan they gave me loan repayment schedule and account statement. In the loan repayment schedule the interest rate is 32% per annum and they are charging 7% foreclosure charge on remaining principal amount with 12.36% service tax. Could u help me sir about this. Is this right or wrong. If i want to make complaint about this where i can do so ?

    • Hi vinaypal

      The mistake you did is not checking these details in the start . How can you not take the documents from them which has all terms and conditions ! . If you have signed the documents, I think they can charge it !

  81. shanker

    hello sir,,
    i have taken home loan on sbh ..i have paid yesterday as a prepayment of sbh home loan (loan amount 9lks)..now sbh manager is asking prepayment penelty 2% (17080 Rs)
    please advise me sir…i am waiting for your replay..why should i pay penelty..Is it is legal .

  82. Som kumar K P

    I had taken a loan of Rs 40 Lakhs from Dhanlaxmi Bank ltd. to construct a commercial building with a repayment tenure of 95 months. Now, after 44 installments I wish to close the loan. Will there be any foreclosure charges applicable on this? Kindly let me know.

  83. Capt. Gupta

    I’ve taken a loan against property of a certain amount from Indiabulls (IFHL) and they are charging a pre-payment penalty of 5.62% which I feel is totally unjustified as I’m getting at a lower interest rate from other sources. They took signatures on blank loan documents. Later on, they filled up various columns which were not acceptable to us. Instead of individual borrowers, they made myself,my wife and my company (pvt. ltd.) as borrowers.
    I want to know are they legally justified in charging such foreclosure at the rate of 5.62%.
    We have lodged a protest and would like to know what legal remedies we have against this kind of extortion by Indiabulls.
    Do consumers like us have any protection against this?
    Kindly let me know.

  84. Surender Arora

    I want to know that if I have taken up a LAP in my company name and wants to make some extra payments in my loan, still an NBFC will put some charges which is 4% of the remaining loan amount on the additional payment i make in my account. Please advice.

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