RBI
stopped prepayment penalty on home loans
since last week. “I welcome this decision because home loan is a national
priority and customers stand to gain,” said Mr. M. Narendra, Chairman and
Managing Director, Indian Overseas Bank.
“The
customers were chased for retail loans earlier and there was enough liquidity
in the market. But today, that situation is not there, and the costs are not
cheaper for any bank. Hence, the waiver of penalty will not trigger any big
shifts in the market,” Mr. Narendra said.
This move
has tempted customer for foreclosure of loans and opt for loan-swaps scheme
offered by banks often.
According to
experts, very less proportion of customers opt for foreclosure. Hence, this
step will enhance competition among banks and better setting up of floating
interest rate home loans.
