National Housing Bank acts tough on Housing Finance Companies
Asks all registered Housing Finance Companies to stop levying penalties on borrowers for pre-closure of loans
Mumbai: In a strongly-worded circular recently issued to all registered Housing Finance Companies (HFCs), the National Housing Bank (NHB), has decreed that henceforth HFCs cannot charge pre-payment levy or penalty from the borrowers when the housing loan is pre-closed by them out of their own sources. Furthermore, the NHB has ordered all HFCs to ensure compliance with the above rule, failing which it has threatened of punitive action on the disobeying organization under provisions of the National Housing Bank Act,1987 on grounds of non-compliance.
The NBH has also mentioned in the circular that the issue of levying pre-payment penalty or pre-payment charges by housing finance companies on pre closure of housing loans by the borrowers out of their own sources was under consideration for quite some time now and it has been finally decided that housing finance companies should not charge prepayment levy or penalty in such cases. The rule comes as a considerable respite for borrowers, who were expecting to have some liberty & discretion in managing their home loans. Since home loans have become an integral component of residential property trnsactions, HFCs so far could exploit the demand situation to their favour. But with the NHB order coming this way, borrowers can now breathe easily.