CA Rushabh Shah
The RBI, vide its circular RBI/2013-14/ 582 DBOD. Dir. BC. No. 110 /13.03.00/2013-14 dated the 7th of May 2014 has advised all the banks that from immediate effect, there shall be no prepayment penalties / foreclosure charges to individual borrowers for all the floating rate term loans. However, it can be clearly inferred from the notification that business / corporate borrowers do not fall under this purview and hence, there is no benefit available to them.
This comes as a relief to individual borrowers as it not allows them avail the benefits of low rate of interest in the market from bankers. This notification comes a few days after the RBI released the First Bi-Monthly Monetary Policy Statement for 2014 – 15 on April 1, 2014 wherein they specifically mentioned that consumer protection is an integral part of financial inclusion. With this notification, the RBI has indicated that banks cannot take any undue benefit of customers difficulty or inattention. RBI has thus initiated steps towards framing comprehensive customer protection regulations based on domestic experience and global best practices.
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Relevant RBI Notification is as follows :-
RBI/2013-14/582
DBOD. Dir.BC.No.110/13.03.00/2013-14
May 7, 2014
All Scheduled Commercial Banks
(Excluding RRBs)
Dear Sir/Madam
Levy of foreclosure charges/pre-payment penalty on Floating Rate Term Loans
Please refer to our circular DBOD. No. Dir.BC.107/13.03.00/2011-12 dated June 5, 2012 on ‘Home Loans- Levy of Fore-closure Charges/ Pre-payment Penalty’.
2. A reference is invited to Part B of the First Bi-monthly Monetary Policy Statement 2014-15 announced on April 1, 2014 proposing certain measures for consumer protection. It was indicated that in the interest of their consumers, banks should consider allowing their borrowers the possibility of prepaying floating rate term loans without any penalty. Accordingly, it is advised that banks will not be permitted to charge foreclosure charges/ pre-payment penalties on all floating rate term loans sanctioned to individual borrowers, with immediate effect.
Yours faithfully,
(Prakash Chandra Sahoo)
Chief General Manager
I had taken home loan from ICICI bank. The loan is issued in my name and my spouse name & all EMI’s are deducted from only my presonal a/c, but for income cretria bank had considered ME, MY spouse & MY HUF AS CO-BORROWER. ( my huf is not any company )
Now I want to close my loan & I am making Pre Payment. My bank is levying on me PRE- CLOUSER Charges saying that as HUF is Co-borrower the pre payment charges apply.
Sir please help & guide me that whether the bank is saying correct or wrong as the rbi notification RBI/2013-14/ 582 DBOD. Dir.BC.No. 110 /13.03.00/2013-14 dated May 7, 2014 clearly says that there should be no pre-payment or pre -clouser charges for home loan on Individual
So If the loan is sanctioned in my name & all emi’s are deducted from my a/c & co borrower is my huf can they charge pre-payment or pre- clouser charges.
Request to help in this matter & guide immediately
Dear Sir
I had taken home loan & top up loan on this home loan in the year 2017 from India Bulls. The loan is issued solely in my name & all EMI’s are deducted from only my personal a/c, but for income criteria bank had considered ME, My Father & MY Proprietor Firm AS CO-BORROWER(without our knowledge).
Now I want to close my loan & I am making Pre Payment. The NBFC is levying on me PRE- CLOUSER Charges saying that as Proprietor of a Firm is Co-borrower the pre payment charges will apply.
Sir please help & guide me that whether the bank is saying correct or wrong as the rbi notification RBI/2013-14/ 582 DBOD. Dir.BC.No. 110 /13.03.00/2013-14 dated May 7, 2014 clearly says that there should be no pre-payment or pre-closer charges for home loan on Individual
So If the loan is sanctioned in my name & all emi’s are deducted from my a/c & co borrower is my firm can they charge pre-payment or pre-closer charges.
Request to help in this matter & guide immediately
Dear Sir
I had taken home loan & top up loan on this home loan in the year 2013. The loan is issued solely in my name & all EMI’s are deducted from only my presonal a/c, but for income cretria bank had considered ME, MY WIFE & MY HUF AS CO-BORROWER. ( my huf is not any company )
Now I want to close my loan & I am making Pre Payment. My bank is levying on me PRE- CLOUSER Charges saying that as HUF is Co-borrower the pre payment charges apply.
Sir please help & guide me that whether the bank is saying correct or wrong as the rbi notification RBI/2013-14/ 582 DBOD. Dir.BC.No. 110 /13.03.00/2013-14 dated May 7, 2014 clearly says that there should be no pre-payment or pre -clouser charges for home loan on Individual
So If the loan is sanctioned in my name & all emi’s are deducted from my a/c & co borrower is my huf can they charge pre-payment or pre- clouser charges.
Request to help in this matter & guide immediately
Dear Sir
I had taken home loan & top up loan on this home loan in the year 2013. The loan is issued solely in my name & all EMI’s are deducted from only my presonal a/c, but for income cretria bank had considered ME, MY WIFE & MY HUF AS CO-BORROWER. ( my huf is not any company )
Now I want to close my loan & I am making Pre Payment. My bank is levying on me PRE- CLOUSER Charges saying that as HUF is Co-borrower the pre payment charges apply.
Sir please help & guide me that whether the bank is saying correct or wrong as the rbi notification RBI/2013-14/ 582 DBOD. Dir.BC.No. 110 /13.03.00/2013-14 dated May 7, 2014 clearly says that there should be no pre-payment or pre -clouser charges for home loan on Individual
So If the loan is sanctioned in my name & all emi’s are deducted from my a/c & co borrower is my huf can they charge pre-payment or pre- clouser charges.
Request to help in this matter & guide immediately
Does a proprietorship firm classify as a individual borrower in relation to foreclosure charges
Hello
Please let me know if a NBFC can charge foreclosure/prepayment charges on loan against property given to an Individual borrower and the co borrower is a Huf karta (which is not a firm.)
The loan was purely given to an individual but Huf was added as a co borrower only for loan eligibility. All the Emis are paid by the Individual alone from his bank account.
Regards
Moxesh 9979729595
Hello
Please let me know if a NBFC can charge foreclosure/prepayment charges on loan against property given to an Individual borrower and the co borrower is a Huf karta (which is not a firm.)
The loan was purely given to an individual but Huf was added as a co borrower only for loan eligibility. All the Emis are paid by the Individual alone from his bank account.
Regards
Prakash
9867334052
Dear sir I have taken 1140000 amount in 09-2014 but I am closing on 09-2016 but magma has given 1144000 and they charges fore closing charges is it APPLICABLE.
Please suggest the same
hello, i m bhupendra jain owner of a pvt ltd co, my bro ther is employed with my co, he has availaed a home loan and my co has become a co borrower in the same loan. now he wants to forclose the loan but tata is saying that full penalty of 2 % is applicable even if the loan is availed by individual and the co is co borrower to it, hence please guide what should be the outcome of this
Mr. Rushabh, as per your posting, RBI has said “All Scheduled Commercial Banks [excluding RRB]” in their notification, so do NBF like chola / tata come / controlled under this policy? As Chola is currently asking processing fee 1% to 2% on Principal for reducing the interest rate from 13% to 12%. If foreclosed from other source of if funds [banks / NBF] it is 4%. Is this correct?
KINDLY MAIL THE forcloser query on xcelcapital09@gmail.com
will give assistance to NIL the For-closer charges with Banks & NBFC..
Dhiraj.
Rushabh ji, we are a MSME unit, we have taken CC loan from HDFC bank for our business in the year 2013 Aug, since their services are very poor we have shifted our account to BOB this January, now to release the documents they are asking for Foreclosure charges to the tune of 2%.
Pls Suggest.
The banker is holding the documents asking for 1 Lakh rupees as pre-closure charges.
for the working capital loan of Rs.50 Lakhs., Pls suggest.
regards
Kirti Jain Kothari
Sir, I have availed a home loan(Floating/Variable Rate) from HDFC Ltd. with main applicant as Individual and co-applicant as HUF
Now, when i approached the Bank for foreclosure, they have levied me prepayment charges of 2%, stating me that, as HUF is a co-borrower, I shall be liable to foreclosure charges.
Please help me with this regards, whether foreclosure charges shall be leviable on me or not?
Your help will be greatly appreciated.
MAYUR SHAH
98201 70525.
sir, i had taken 42,50,000/- in cholamandalam invesment and finance company ltd. after the completion of 13 EMI, now i take over my loan to HDFC LTD. from CIFCL they charged 4%+14.5% ST of my outstanding.Applicant is my Father and co applicants are me and my mother. Iam serviced my loan in floating rate only. How can they charged me. Kindly advice me to recover the charges from them ???
Thanking you.
SIR, I HAVE TAKEN A LOAN AGAINST PROPERTY in my PROPEIRTORYSHIP FIRM FROM Indiabulls Housing Finance FOR Rs.9000000 WHICH I HAVE TO FORECLOSE. Indiabulls HAS CHARGED ME 5.62% PRE-CLOSURE CHARGES. REQUEST PL ADVICE IF ANY NOTIFICATION IS THERE TO GET OUT OF THESE FORECLOSURE CHARGES. FURTHER PLEASE ADVICE IF IT IS ALSO COVERED UNDER THE NOTIFICATION NO.RBI/2013-14/ 582.
dear sir
myself taken a loan of Rs.1 core for industry,after one year again put up loan for Rs.21.50 which is sanctioned but not disbuds and against that additional mortgage also done,now what to do?
i have a lap at india bulls,i am a properitor.applicant is the company and me .As i am the properitor of the company or the only owner of the company ,as per the new circular
the preclosing charge on my lap with the india bulls can be levied. because the charge is 5.7 is their preclosing charge rate .could you please advise me on the same ,
thanking you,
varghese
I taken lap loan from India bull on this base of sole proprietors
please tell us about foreclosure is applicable or not on urgent bases
they are charges About 5.70% foreclosure near about 3 lacs
please help us
LOAN AGAINT HOUSE ….MORTGAGE LOAN PAR HUF KE KAARAN FORCLOSER CHAGRES LAGTE HAI KYA ?? PLZ COMFIRM SIR .
sir i had taken a loan against property at cholamandalam investment and finance company,the loan is being balance transferred to another bank because of lower interest rate, is the foreclosure charges applicable to me , applicant being me i.e my proprietoship company and co-applicant being my father pls do guide me
Sir I am taken a loan from ICICI Bank Interest in floating for individual name and co applicant my company. if applicable for prepayment charges?
sir, I have taken loan from HDB one year back now I approached LIC home finance due to less interest rate how much percentage will be the loan closing charges
Sir, we had taken loan against property considring me, my wife, my son & my proprietorship company whose proprietor is huf as applicant & co-applicant, now I want to switchover the loan and the bankers are charging penalty of 4%, as the penalty is only if pvt.ltd co or partnership company is involved proprietorship company is treated as individual only, please guide us.
From 2years I am paying emi with out fail to hdb bank but 6 months back I taken top up loan bur now I want close my mortgage loan but hdb man is not provideING flore closer letter what I need to do plz lelf me 919945056369
Dear Sir,
We have taken LAP from HDB FINANCIAL SERVICES LTD ON MARCH-2013 at Bhavnagar Branch (Rajkot office,Gujarat) on individual borrowing. He was given condition to credit in Firms current account and repayment for the said account.I have to foreclose this loan at this time, they will charge 4.49% on this loan. Pls advice me for this loan.What should I do? whether i have to pay or not.
This loan foreclosure criteria is not applicable to corporate customers. This is applicable to only individuals i.e. retail customers. In fact, the retail customers who have availed a loan from bank or NBFC, are falling under this catagory of non payment of foreclosure. Please refer:
https://taxguru.in/rbi/banks-levy-foreclosure-charges-prepayment-penalties-floating-rate-term-loans-sanctioned-individual-borrowers.html
Best Regards
SIR, I HAVE TAKEN A LOAN AGAINST PROPERTY PROPERTITYSHIP FIRM FROM Indiabulls Housing Finance FOR Rs.24700000 WHICH I HV foreclose ON 19DEC14 Indiabulls HAS CHARGED ME 5.62% PRE-CLOSURE CHARGES REQ PL ADVICE HOW I CAN Rebate THIS CHARGE.
SIR,
I HAVE TAKEN A LOAN AGAINST PROPERTITY FROM KOTAK MAHINDRA BANK FOR Rs.35,00,000
WHICH I HV RE-PAID ON 11DEC14 BANK HAS CHARGED ME 4% PRE-CLOSURE CHARGES
REQ PL ADVICE HOW I CAN RE-COVER THIS CHARGES FROM THEM ???
Rakesh Poddar asking advice:-
I have a loan running with Edelweiss. It is a housing loan on variable rate of interest. I am the applicant and my pvt ltd company is co applicant
I intend to transfer this loan into another bank. They are asking me to pay 2% penalty / charges.
Please advise if liable to pay any pre payment penalty fee to Edelwiess for Foreclosure.
Sir i have taken Rs 20,05,825 Laks of Loan against property from HDB fin services during Mar 2014 at 15% rate of Interest. Now can I Prepayment this loan 24th Nov 2014. The Bank prepayment charge @2.25%. I was pay this charge.
I Want refund this charge. please advise me how can i refund this charge
Citibank tookover my jt home loan and also provided a top up(takeover +enhancement).However they included my pvt ltd company as a co borrower (I and my wife are the only directors and shareholders in the company). Now i want to switchover to another bank.Citibank official informed me that 4% penalty will be levied for foreclosure.Are they right in demanding this prepayment penalty .The asset is owned by me and EMI also goes from my personal bank account. Pls clarify
Arun Jain
bestbrand@gmail.com
i take mortgage loan against property from hdb financial service on sept-2012. i have close loan a/c now. but company demand fore closer charge. please advise me fore closer charge payable / not payable.
dear sir
I take mortgage loan against property from hdb financial service Bhilwara rajesthan on march 2014. i have close loan a/c now. but company demand 4% fore closer charge. please advise me fore closer charge payable / not payable.
i take mortgage loan against property from hdb financial service on march 2014. i have close loan a/c now. but company demand 4% fore closer charge. please advise me fore closer charge payable / not payable.
I have taken 2 loan from citibank creditcard they charge me pre close
charges for my 1st loan is thier
any wave off for preclose loanplz intimate
me
Dear Sir
I have taken a mortgage loan from Indian infoline in individual name
The asset is owned by me and EMI also goes from my personal bank account.
While applying for loan , my private limited company was made a co applicant to the loan.
Now
If I foreclose the above loan, will foreclosure charges be applicable???
Kindly advise
Regards
SIR I HAVE TAKEN A LAP LOAN FROM HDB AND ON PRE CLOSURE ARE DEMANDING 4.5% AS PRE CLOSURE CHARGES .PLS KINDLY ADVICE
SIR I HAVE TAKEN A LAP LOAN FROM HDB AND ON PRE CLOSURE ARE DEMANDING 4.5% AS PRE CLOSURE CHARGES .PLS KINDLY ADVICE.
elektrotrade@yahoo.co.in
sir main 6 month phele aapna loan fullerton se lea tha .or ab main apna forecloser letter maang raha hoo to woh mujhe mana or dara rahe hai ki aapko nhi mill sakta forecloser kya yeh baat thik hai
plz contach me 9582092134
i take mortgage loan against property from hdb financial service on sept-2012. i have close loan a/c now. but company demand fore closer charge. please advise me fore closer charge payable / not payable.
Sir,
Please let me know whether HDB Financial Services, a Subsidiary of HDFC, is a Bank Regulated under RBI. Does the notification of July 2014 of RBI regarding waiver of foreclosure charges is applicable to loans sanctioned by HDB Financial Services, a Subsidiary of HDFC
with regards
V.N.Murthy
Sir i have taken Rs55.00 Laks of Loan against property from HDB fin services during Dec 2013 at 14% rate of Interest. Now can I Transfer thuis LAP to other Financial Institutions at lower Interest rate without foreclosure charges. Pl enlighten me in this regard
with regards
Bhagya.N.Murthy
Dear Sir,
Please clarify the notification by RBI on Levy of foreclosure charges/pre-payment penalty on Floating Rate Loan against property. I have taken a LAP from Edelweiss.
Sir, I have taken a loan with india bulls housing finanace.Is waiver of pre closer charges applicable inindia bulls ?( as per Rbi new notification).under what catagery does india bulls comes, is it a nbfc ?
Dear Sir,
Please clarify the notification by RBI on Levy of foreclosure charges/pre-payment penalty on Floating Rate Term Loans. Is this notification applicable for personal loan.
I have a loan running with Religare Finvest Ltd.
It is a Loan Agaisnt Property.
I intend to pre close this loan. They are asking me to pay 2% penalty / charges.
RBI in its Bi-Monthly Policy of April or May 2014 had advised banks not to charge customers any penalty or fee for preclosure.
Please advise if i am eligible for this new notification and not liable to pay any fee to Religare for preclosure.
This shall not be applicable to commercial loans provided by Non Banking Finance Companies. The said notification is applicable only to Banks regulated under the Reserve Bank of India. However, if the said Loan against Property is provided by any bank, then it is covered under this notification.
Please clarify whether this is applicable for Commercial loan taken against Property also. Taken from say Diwan Housing ,India Bulls etc.