RBI bans NBFCs from charging loan foreclosure penalties
PTI, Aug 4, 2019, 10:23 AM IST
Mumbai: The Reserve Bank on Friday barred non-banking finance companies from charging pre-payment penalties or foreclosure charges from individual borrowers.
“NBFCs shall not charge foreclosure charges/pre- payment penalties on any floating rate term loans sanctioned for purposes other than business to individual borrowers, with or without co-obligants,” the central bank said in a notification, without specifying from when the new ruels will be effective.
The central bank said the relevant rules governing the same have been updated to reflect the change. Foreclosure charges are part of the fee income for any lender and adds to its bottomline.
These direction covers both deposit-taking and non- deposit-taking NBFCs which are considered systemically important ones. It can be noted that in May 2014, the RBI had barred commercial banks from charging such fees or penalties from individual borrowers with mortgage loans.
But banks are free to charge same on non-secured loans like personal loans. The notification, which will take away an income line for these players, comes at a time when NBFCs are struggling with a host of issues, starting with liquidity crisis. The regulator has blamed asset liability mismatch for the troubles.
Udayavani is now on Telegram. Click here to join our channel and stay updated with the latest news.
Top News
Related Articles More
Kotak Mahindra Bank shares tank 13%; mcap erodes by Rs 37,721 crore post RBI action
Four-day market rally makes investors richer by Rs 8.48 lakh crore
Kotak Bank barred from onboarding customers online, issuing fresh credit cards
Reverse migration has begun, says FM Nirmala Sitharaman
Markets sustain winning streak — Sensex jumps over 560 points, Nifty tops 22,300-level
MUST WATCH
Latest Additions
AAP Introduces Stirring Lok Sabha Campaign Anthem: ‘Jail Ke Jawab Mein Hum Vote Denge’
EC Seeks BJP’s Response on Allegation of Model Code Violation by PM Modi
Kollegela MLA A.R. Krishnamurthy escapes unhurt in car mishap
Lok Sabha elections 2024: EC takes cognisance of MCC violation by Modi, Rahul; seeks response by April 29
Polali: Case filed against a man for molesting minor