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

  • 1Non-Banking Finance Company(NBFC)
  • 2Commercial Banks
  • 3Payment Banks
  • 4Co-operative Banks
Answer:- 1

The Reserve Bank of India(RBI) has barred the both deposit-taking and non- deposit taking NBFCs(Non-Banking Finance Companies) from charging pre-payment /foreclosure charges on any floating rate term loans sanctioned for purposes other than business to individual loan borrowers. Impact: The move will affect income line of NBFCs which are now troubling with the stock of issues including liquidity crisis.For Banks: RBI barred commercial banks from charging such penalties from individual borrowers with mortgage loans in May 2014. But it allows banks to charge on unsecured loans like credit cards, personal loans.Foreclosure: The foreclosure of personal loan is the full repayment of the remaining loan amount in one single payment instead of paying monthly installments.

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