"This will give huge relief to auto and personal loan borrowers as most banks charge for pre-payment of such loans. "
Mumbai, May 7 - The Reserve Bank of India - Thursday directed all the commercial banks not to levy any penalty on pre-payment of loans under floating rate scheme that cover housing, auto as well as personal loans.

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, the RBI said in a notification.

This will give huge relief to auto and personal loan borrowers as most banks charge for pre-payment of such loans.

Some banks charge pre-payment penalty of up to two percent of the outstanding amount. In case of housing loans, however, most banks are not charging for pre-payment.


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