The Reserve Bank of India vide its Notification No DBOD. No. Dir. BC.107/13.03.00/2011-12 dtd 5th June 2012 has issued a new directive to all banks with regard to charge of foreclosure/prepayment penalties in respect of Home loans taken on floating rate method.
As per the above notification, the banks will not be permitted to charge foreclosure charges/pre-payment penalties on home loans on floating interest rate basis, with immediate effect.
The relevant Notification is reproduced below :-