Reserve Bank of India (RBI) in an RTI response dated 03.09.2009 mentioned that RBI does not approve policy of foreclosure-charges on pre-payment of loans, but keeping short of issuing any directives. However foreclosure-charges subsequently were abolished in a phased manner starting from RBI notification dated 05.06.2012 for home-loans with last two RBI notifications in this regard issued on 02.08.2019 where pre-payment of all types of loans except business-loans both for banks and NBFCs were waived.
With unprecedented economic-slowdown, business-activities have been drastically reduced where normal businessmen under pressure of loans wish to take sigh of relief by getting rid of loans of banks or NBFCs by arranging funds by selling assets or otherwise. Many NBFCs are charging foreclosure-charges to tune of abnormally high of 5-percent plus GST.
RBI should respect its own principle of being against basic concept of foreclosure-charges by immediately abolishing all types of loans both by banks and NBFCs including business-loans and loans with fixed interest-rate.
SUBHASH CHANDRA AGRAWAL