RBI firm on scrapping pre-payment charges

Q: Hi, the RBI is quite firm on scrapping the charges levied by banks on pre-payment of loans -discuss

Ananya,

9th April 2014

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Hi, yes The Reserve Bank has passed order to banks to scrap penalty on pre-payment of all retail and small corporate loans and do away with fines for failure to maintain minimum balance. spokesperson said that since these loans are on floating rate of interest there is no justification of pre payment charges.

N.Mathur, Delhi-NCR

9th April 2014

Comment

This is a very good move and will benefit the small corporates as banks are often seen to discriminate between retail and big corporate clients. the big corporate houses do dominate based on their sheer size and loans are restructured to meet their demands.

Baijnath Prasad, Noida

9th April 2014

I will support this move by RBI as many banks charge upto 4 % of outstanding loans by citing costs if customers attempt to pre-pay. This often deters customers and is a good revenue stream for some banks.

Rakib, Lucknow

9th April 2014

Hi there is a flip side also as Banks say that there is a cost involved in offering services such as cheque books, ATM transactions and account statements which necessitate minimum balance of Rs 20,000 for corporate accounts and the charges are justified if this min balance is not maintained.

Kiran Kumar, Chennai

9th April 2014