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Private bank is not allowing to preclose personal loan, please advise.
29-Jan-2023 (In Banking / Finance Law)
Dear Sir/Madam, I availed a personal loan from a Pvt bank in Chennai for an amount of 5 lakhs in the month of Oct 2016. Now I wish to pre close this loan. When I approached the bank, they said that as per the agreement signed , I cannot close this account before 12 months. Neither preclose nor part payment is allowed before 12 months. I'm ready to pay the pre closure charges to close it. However the agreement is creating a problem. Thy say that if there is a genuine reason like travelling abroad , they can consider preclosure by submitting the copies of visa docs and all. My query is that is there any way to break this agreement and pre close my account? Or is there any alternative arrangements to close the loan? Thank you for your help on this. Thanks and Regards.
Hi,
As per RBI guidelines RBI/2013-14/582 dated 07.05.2014, banks should consider allowing their borrowers the possibility of prepaying floating rate term loans without any penalty. Accordingly, it is advised that banks will not be permitted to charge foreclosure charges/ pre-payment penalties on all floating rate term loans sanctioned to individual borrowers, with immediate effect.
As per the above mentioned guidelines, Banks should consider it means that they must have to consider in case a consumer approach the bank for foreclose the loan.
Hope the above will satisfy your query.
As per RBI guidelines RBI/2013-14/582 dated 07.05.2014, banks should consider allowing their borrowers the possibility of prepaying floating rate term loans without any penalty. Accordingly, it is advised that banks will not be permitted to charge foreclosure charges/ pre-payment penalties on all floating rate term loans sanctioned to individual borrowers, with immediate effect.
As per the above mentioned guidelines, Banks should consider it means that they must have to consider in case a consumer approach the bank for foreclose the loan.
Hope the above will satisfy your query.
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Adv. Shobhan M P
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