[Resolved]  LICHFL, Thanjavur — Foreclosure / Shifting of Housing Loan

Dear Sir, Myself Mr. Mahesh Bhosale, I have taken a Housing Loan from LIC Housing Finance Limited, Kharadi Branch, Pune bearing Loan Account No.[protected]. Currently I am having a Housing Loan of around Rs 2400000/- at the floating Interest of 11%. I have approached the Branch for foreclosure of Housing Loan as I was planning to shift the same loan to SBI / HDFC where interest rates are low but I was told by the Branch Manager Mr. Rajiv that I need to pay a Penalty of 2% as the foreclosure is not from my own source. Recently I have came across the RBI Guideline dated 5th June 2012, bearing reference number RBI/ 2011-12/ 589. DBOD. No. Dir. BC. 107 / 13.03.00/ 2011-12 which says "The Damodaran Committee had observed that foreclosure charges levied by banks on prepayment of home loans were resented upon by home loan borrowers across the board, especially since banks were found to be hesitant in passing on the benefits of lower interest rates to the existing borrowers in a falling interest rate scenario. As such, foreclosure charges are seen as a restrictive practice deterring the borrowers from switching over to cheaper available source. It is felt that the removal of foreclosure charges/prepayment penalty on home loans will lead to a reduction in the discrimination between existing and new borrowers and the competition among banks will result in finer pricing of home loans with the floating rate. Though many banks have, in the recent past, voluntarily abolished the pre-payment penalties on their floating rate home loans, there is a need for ensuring uniformity across the banking system in this regard. Accordingly, it is proposed". Request you to help me in either reducing the interest rates or shift the Loan to other bank with paying this foreclosure amount of Rs. 50000/- approx. Warm Regards Mahesh Bhosale [protected]