Enquiry by the Competition Commission of India against some Banks/ Housing Finance Institutions
The Government has informed Lok Sabha that the Competition Commission of India (CCI) has received information under section 19 of the Competition Act, 2002 against some Banks/Housing Finance Institutions with regard to anti-competitive agreements on imposing penalty for pre-payment of home loans. In reply to a question Shri Salman Khirshid, Minister for Corporate Affairs, informed the House that The matter is being enquired into by the Commission for appropriate necessary action.
Kindly Refer to
Privacy Policy &
Complete Terms of Use and Disclaimer.
S.Santhanakrishnan M.A
Chennai
It is a strange practice of levying huge Pre-payment penalty by Standard Chartered Bank, Citi Bank, HDFC bank, Citi Financial, etc., hovering around 6%. for Pre Closure of Loan Account citing Asset-Liabilty Mismatch and terms of loan etc., Is it not usurarious? As the Banks are carrying the business of Lending & Borrowing with Floating Rate of Interest levied on Loans, Improved Recovery Methods such as Sarfasei, etc., No one envisages when they will close the Loan. Let the Banks are brave enough to charge Upfront as processing charges under the competitive environment. It is absurd to levy Pre Closure Charges at the time of closure and it is partial. The Govt. should put it as illegal and stop this Levy. Let us hope the Govt./RBI will take necessary action even it is too late.
Exorbitant Pre Payment penalty Charges on Fore closure of Bank Loans being levied in the Order of 4.49% to 5.65% by these Bank for voluntary Closure of Loan Account with them. Despite honest repayment of EMI the Charges are levied citing the terms of the Agreement and no rule by RBI forbids these kind of Menace. However RBI express their displeasure for foreclosure charges like politician. Further CCI is also not taking any action so far in this regard under Competition Act, as the terms of such Bank’s agreement are violative of natural justice.
Once this fleecing Charges being stopped, the entire Banking Customers will reap benefits and no bank will try to loose good customers in view of healthy competition.
Is it tenable? Under what provisions of the Indian Law can we take action against these Banks? Please clarify in this regard.
A pending issue long overdue. One more instance where Government’s intention to promote housing is being misused by financial institutions for greed. Punishing the early payer by asking him to pay more whilst settling with the loan at a lower amount with the fraudulent and defaulters. The enquiry deserves all support. It would be beneficial if Tax Guru takes the lead in compiling compliants from all those affected and provides it to the enquiry committee.