SBI is the largest lender Bank in India. SBI has decided to take off pre-payment penalty/charges on Home Loan, which give helps to Home loan borrower.
"We have decided to do away with the pre-payment charges on all kinds of housing loans with immediate effect," a senior officer of the bank said.
The bank has been charging pre-payment penalties only on housing loans with floating interest rates taken before May 2011, the official said. It has been charging about 2 per cent of the outstanding amount as penalty if borrowers opted to foreclose their loans.
The decision from the largest lender will prompt other lenders to follow the suit.
The total outstanding home loan of SBI rose to Rs 92,383 crore at the end of September against Rs 86,769 crore in March 2011.
At present, some banks are charging up to 2 per cent as pre-payment penalty on the loan outstanding, if a borrower settles the full payment before maturity by switching over to another lender.
No pre-payment fine is charged if borrowers pay using their own funds.
It may be be noted that the Reserve Bank has indicated that it would scrap prepayment penalties charged by banks.
"It is proposed to implement the recommendations of the Damodaran Committee, on which a broad consensus has emerged, as also the action points which were identified by the IBA (Indian Banks' Association) and BCSBI (Banking Codes and Standards Board of India) in the last Banking Ombudsmen conference," RBI had said in its mid-year credit policy review.
The National Housing Bank has informed to all Housing Finance Companies/Institutions/Banks as Housing Finance Regulator to desist from imposing a pre-payment penalty on home loan borrowers last month.
"We have decided to do away with the pre-payment charges on all kinds of housing loans with immediate effect," a senior officer of the bank said.
The bank has been charging pre-payment penalties only on housing loans with floating interest rates taken before May 2011, the official said. It has been charging about 2 per cent of the outstanding amount as penalty if borrowers opted to foreclose their loans.
The decision from the largest lender will prompt other lenders to follow the suit.
The total outstanding home loan of SBI rose to Rs 92,383 crore at the end of September against Rs 86,769 crore in March 2011.
At present, some banks are charging up to 2 per cent as pre-payment penalty on the loan outstanding, if a borrower settles the full payment before maturity by switching over to another lender.
No pre-payment fine is charged if borrowers pay using their own funds.
It may be be noted that the Reserve Bank has indicated that it would scrap prepayment penalties charged by banks.
"It is proposed to implement the recommendations of the Damodaran Committee, on which a broad consensus has emerged, as also the action points which were identified by the IBA (Indian Banks' Association) and BCSBI (Banking Codes and Standards Board of India) in the last Banking Ombudsmen conference," RBI had said in its mid-year credit policy review.
The National Housing Bank has informed to all Housing Finance Companies/Institutions/Banks as Housing Finance Regulator to desist from imposing a pre-payment penalty on home loan borrowers last month.
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