The Reserve Bank of India (RBI) on August 2, 2019 notifies certain clarifications regarding the Levy of Foreclosure Charges or Pre-payment Penalty on Floating Rate Term Loans.
RBI, previously in year 2012 and 2014 vide its notification disallowed charging of foreclosure charges or pre-payment penalties on all floating rate term loans sanctioned to individual borrowers by banks. In this connection, RBI on August 2, 2019 notified that individual borrowers who has taken any term loan for other than business purposes on floating rate, banks shall not be allowed to charge foreclosure charges or pre-payment penalties on any such loans.
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