Is There any RBI Circular regarding Personal Loan/Home Loan Foreclosure that Banks charge at the time of early loan closure by Own orBalance Transfer?

[Shubhk385]

At the time of Loan approval and Disbursment, Bank executive never inform all terms to their customer that if they want to pre-close a loan how and what charges there will be.
90% Customers are not aware of the banking rules and terms.
Also NBFCs make their own terms and conditions, get this signed by customer by saying these are just formalities and provide Loan amount with High ROI.
And if customer is getting a opportunity to transfer a loan with minimum ROI then NBFCs ask for the foreclosure charges which are also too high and if principal amount is big then customer will have to pay that much extra amount only as a charge.

is it really a fair deal for customer? Does it come under RBI norms? Are these charges should be taken ? Can't these charges waive off or reduce as per the customer requests?

 

[zacobite]

At the time of Loan approval and Disbursment, Bank executive never inform all terms to their customer that if they want to pre-close a loan how and what charges there will be.
90% Customers are not aware of the banking rules and terms.
Also NBFCs make their own terms and conditions, get this signed by customer by saying these are just formalities and provide Loan amount with High ROI.
And if customer is getting a opportunity to transfer a loan with minimum ROI then NBFCs ask for the foreclosure charges which are also too high and if principal amount is big then customer will have to pay that much extra amount only as a charge.

is it really a fair deal for customer? Does it come under RBI norms? Are these charges should be taken ? Can't these charges waive off or reduce as per the customer requests?

all tnc will be in the agreement you sign.. customers don't read it and sign blindly

 

[ShavirB]

At the time of Loan approval and Disbursment, Bank executive never inform all terms to their customer that if they want to pre-close a loan how and what charges there will be.
90% Customers are not aware of the banking rules and terms.
Also NBFCs make their own terms and conditions, get this signed by customer by saying these are just formalities and provide Loan amount with High ROI.
And if customer is getting a opportunity to transfer a loan with minimum ROI then NBFCs ask for the foreclosure charges which are also too high and if principal amount is big then customer will have to pay that much extra amount only as a charge.

is it really a fair deal for customer? Does it come under RBI norms? Are these charges should be taken ? Can't these charges waive off or reduce as per the customer requests?

Banks can't possibly do this as there 100s of T&Cs, this is why they make you sign the Sanction Letter and Agreement. Also RBI has a rule for Floating Rate Loans where Banks can't charge prepayment fees.

 

[Shubhk385]

all tnc will be in the agreement you sign.. customers don't read it and sign blindly

Thats what I said, 90% customers are not fully aware of hidden T&C, Bank executive should make customer aware about it.

Its not about customer sign blindly, its about Bank's executive's responsibility that they should make customer aware about it and then ask to sign an agreement.

 

[Shubhk385]

Banks can't possibly do this as there 100s of T&Cs, this is why they make you sign the Sanction Letter and Agreement. Also RBI has a rule for Floating Rate Loans where Banks can't charge prepayment fees.

Agreed.
I was not aware about this RBI rule. Thanks for this suggestion.
But what about Prepayment or foreclosure fees for Balance transfer loans? Does it come under RBI's norms?

Because as I read somewhere, as per RBI rule (The same about you mentioned) Bank or NBFCs should inform or make aware their borrowers about difference between Fixed & Floating Rate at least once in a year. So that if customer wants to change their ROI type as per the conviniene they can change.

Is it so?

 

[zacobite]

Thats what I said, 90% customers are not fully aware of hidden T&C, Bank executive should make customer aware about it.

Its not about customer sign blindly, its about Bank's executive's responsibility that they should make customer aware about it and then ask to sign an agreement.

its the customers responsibility not the banks.. they document everything.. everything cannot be the banks fault.. where is the ownership of the customer in the transaction.. i understand if banks defraud or cheat or give false information.. but customer has to protect their own interests first

 

[ShavirB]

Agreed.
I was not aware about this RBI rule. Thanks for this suggestion.
But what about Prepayment or foreclosure fees for Balance transfer loans? Does it come under RBI's norms?

Because as I read somewhere, as per RBI rule (The same about you mentioned) Bank or NBFCs should inform or make aware their borrowers about difference between Fixed & Floating Rate at least once in a year. So that if customer wants to change their ROI type as per the conviniene they can change.

Is it so?

Bank would treat prepayment and balance transfer the same way since they would be losing business in either case.

RBI doesn't specifically state if this rule is valid for simple prepayment or Balance Transfer.

 

[Shubhk385]

Bank would treat prepayment and balance transfer the same way since they would be losing business in either case.

RBI doesn't specifically state if this rule is valid for simple prepayment or Balance Transfer.

Exactly, thats the thing I wanted to know.

Thank you very much

 

[abhimarda]

Bank would treat prepayment and balance transfer the same way since they would be losing business in either case.

RBI doesn't specifically state if this rule is valid for simple prepayment or Balance Transfer.

For floating rate home loans there is no prepayment charges whether you pay from own fund or get a balance transfer however for fixed rate home loans there is no charges for paying from own funds but balance transfer to other bank/FI normally has charges. For other types of loans like personal loan/ car loans these are normally fixed rate loans and the banks will normally charges something for prepayment.