POSTED BY June 25, 2012 10:47 am COMMENTS (3)
ONPl give me the Correct extracts from the para 81-83 by RBI.showing that all types loan taken against commercial property @ floating rate interest, are abolished from fore-closure charges/pre-payment penalty.
My loan against property comes under Home saver Plan taken from StanChart Bank.
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.
I after referring para 81-83 it is told that : 83. Detailed guidelines in this regard will be issued separately.
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Dear Suresh, are you planning to prepay in part or full & want to know the applicability of prepayment charges?
Thanks
Ashal
Thanks.
Dear Ashal
Yes I am planning to prepay in full & want to know the applicability of prepayment charges?
My loan is against property @ floating rate of interest.StanChart Bank named it Home Saver Loan.Para 81-83 not complete in nature clearly saying that : 83. Detailed guidelines in this regard will be issued separately.
Pl inform me.
Thanks
Suresh
Dear Suresh, if I recall right, this Home saver product is similar to SBI’s Max Gain home loan product. So why do you want to prepay in full. If the interest rate is an issue, You may contact your bank & ask for a reduction. By paying a nominal fee, you can get a new rate of interest.
In general as the loan for you is not ordinary home loan but loan against property, the RBI circular is not applicable to you to avoid prepayment charges.
Thanks
Ashal