CURRENT AFFAIRS

2019

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

Which entity, has been barred by Reserve Bank of India(RBI) from charging pre-payment penalties or foreclosure charges from individual borrowers?

A	Non-Banking Finance Company(NBFC)
B	Commercial Banks
C	Payment Banks
D	Co-operative Banks

Explanation:

Detailed explanation-1: -(vi) Foreclosure Charges / Prepayment Penalty - With effect from June 26, 2014 it has been decided that UCBs will not be permitted to charge foreclosure charges / prepayment penalties on all floating rate term loans sanctioned to individual borrowers.

Detailed explanation-2: -It is clarified that NBFCs shall not charge foreclosure charges/ pre-payment penalties on any floating rate term loan sanctioned for purposes other than business to individual borrowers, with or without co-obligant(s). 3.

Detailed explanation-3: -Foreclosure charges: 5% on outstanding principal + GST (for salaried borrowers) No charges if loan is closed using own funds (for MSME classified borrowers) Any waiver on prepayment charges are applicable if borrower has paid at least 12 EMIs.

Detailed explanation-4: -While on adjustable rate home loans there are no prepayment charges, on fixed rate home loans, lenders usually charge a penalty of 2 percent of the amount being prepaid through refinance, i.e. when you borrow to prepay your home loan.

There is 1 question to complete.