‘No pre-payment fine on floating rate term loans’

Kolkata: The regulator on Friday reiterated that no lender should charge pre-payment penalty from borrowers for foreclosure of floating rate term loans. In two separate notes to banks and non-banking finance companies, the regulator has clarified that lenders cannot levy penalties on any floating rate term loan sanctioned to individual borrowers with or without co-obligants, when the loan is taken for purposes other than business. Small finance banks and local area banks will also have to follow this advisory.