ICICI Home Loan Pre Closure Penalty

POSTED BY Ravi Sundar ON August 3, 2012 4:44 pm COMMENTS (7)

I opened a ICICI home loan (LBBNG0000139549) in 2005 and pre-closed in Feb 2012. I was at fixed rate of interest from Nov 2011 till Feb 2012. As I was on fixed plan, at the time of loan closure, i was levied a penalty for pre-closure.
 
I was charged twice, first for plan conversion (in Nov 2011) and next a penalty in Feb 2012 for pre-closure. During the plan conversion, I was not briefed by the ICICI staff, that penalty is applicable in Fixed plan. Again during closure in Feb 2012, I was not given an option to move back to floating, to avoid / reduce the penalty.
 
Due to urgent requirement, I had to sell the property and hence i had to close the loan. I was forced to agree to pay the penalty, to clear the loan. I was on fixed plan only for a short period of 3 months. I did not gain advantage of fixed rate, as I had to pre-close the loan due to urgent family needs.
 
I should be given exemption against pre-closure penalty for the following reasons:

1) When I took the loan in 2005, it was on floating rate.

2) The pre-closer penalty is not applicable to floating rate loans.

3) My loan was on a temporary “fixed” plan, at the time of closure. But, I have already paid the conversion charges from floating to fixed. I have been charged twice, once during conversion and again once during loan closure.

4) I closed the loan from my personal funds. Hence I should not be charged a penalty.

5) NHB circular is directing banks not to charge pre-payment penalty on all floating-rate home loans or pre-closure of fixed-rate home loans through own sources. My loan should be treated as a floating one (as it started in 2005). And I used my personal funds to close. Hence penalty should not be levied.

My requests or complaints for refund of the penalty is not favorably considered by ICICI. I strongly feel, I am unduly charged by the bank, by making use of the opportunities and circumstances. Is there any way to get refund of the penalty ?
 
Contact me for any clarifications on             98450-21087       or ravisund@gmail.com

7 replies on this article “ICICI Home Loan Pre Closure Penalty”

  1. sukhadev says:

    I have taken loan from lic and my fixed period is finshed of two year. now they are charging me 11.75% roi as floating. So i wanted to change to other bank. Icici bank is offering 9.6% with ten year fixed and floating also. hdfc is giving me same Roi with wave off processing fees in floating plan. So please advice me should i go with icici or hdfc bank ?

  2. ashalanshu says:

    Dear Pankaj, 2% is the basic penalty fee and 0.24% is the service tax @ 12%, going to Govt. of India.

    thanks

    Ashal

  3. pankajss says:

    Hello Ravi,

    Did you get response from ICICI Bank Official? My case is similar to you and now the bank is asking for Pre-closure charges which is 2.24 percentage of total outstanding amount. How this 2.24 % is calculated? Any idea to anyone?

    – Pankaj

  4. ICICI Bank Care says:

    Hi Ravi,

    We are sorry for the inconvenience caused to you. We have made a note of your contact details. Our official will get back to you at the earliest.

    Regards,
    ICICI Bank Customer Service Team

  5. Dear Ravi, first a clarification – ICICI bank is governed by rules & regulations of RBI & not by NHB.

    In your case, the stands taken by ICICI is justified. Yes you were on fixed rate for merely 3 months but originally when you opted for fixed rate, instead of floating one, you made a choice & withion next 3 months, due to your personal reasons, this choice proved wrong. I assume you were paying 12.5 or 13 or may be even higher ROI as floating so opted a lower ROI under fixed rate.

    If the loan had not been closed due to that emergency, you were not cribbing this second fee levied for loan closure. Please accept the truth & the situation happily. Also please take this episode as a learning for your future.

    Thanks

    Ashal

    1. Ashish says:

      Ravi has every right to save money by opting for fixed loan. That does not mean he was rightfully charged the preclosure penalty by ICICI Bank. Ashal ….Im sure you are also a banker or may be from ICICI bank or one of their online reputation management agencies, so talking their language.

      The point is why should one pay that extra 2-5 percent penalty just because the poor guy just wants to be debt free. Penalty for giving back someone’s money?…Pathetic., banks just want to earn money by any means they can.

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