The Reserve Bank of India has asked non-banking finance companies to not charge foreclosure charges/ pre-payment penalties on all floating rate term loans sanctioned to individual borrowers, with immediate effect.
In May, the central bank had issued a similar directive to banks as a measure of customer protection.
The latest RBI directive is aimed bring in uniformity with regard to prepayment of various loans by borrowers of banks and NBFCs.
It is in the interest of their consumers, banks and NBFCs should allow their borrowers the possibility of prepaying floating rate term loans without any penalty.