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HomePersonal Finance3 Good News - RBI abolish prepayment penalty, minimum balance charges

3 Good News – RBI abolish prepayment penalty, minimum balance charges

3 good news

Reserve Bank of India (RBI) has given good news to end customer. Keeping consumer protection in mind RBI release 3 major mandates to Banks.

1. NO Prepayment penalty charges for floating rate term Loan

Providing major relief to borrowers RBI directed banks not to Levy of foreclosure charges/pre-payment penalty on Floating Rate Term Loans.

RBI notification  released today clearly says that “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.

Floating loan products include housing and auto loans.

2 NO penalty/charges on non-maintenance of minimum balances in dormant/inoperative Accounts

RBI also directed banks not to apply penal charges for non-maintenance of minimum balance in any inoperative accounts.

RBI notification says that “It is advised that henceforth banks are not permitted to levy penal charges for non-maintenance of minimum balances in any inoperative account.”

Now bank cannot take advantage of customer difficulty or inattention. Bank can limit services available on such accounts such as removing ATM or Internet banking facility and can restore the services when the balances improve to the minimum required level.

3 Minor above age 10 can operate saving bank account autonomously

RBI has also given relaxation in operation of bank accounts by minor age 10 and above. Earlier bank account for minor was open with condition that it will be operated by guardian/parents but now situatin is different.

RBI notification says that “Minors above the age of 10 years may be allowed to open and operate savings bank accounts independently, if they so desire. Banks may, however, keeping in view their risk management systems, fix limits in terms of age and amount up to which minors may be allowed to operate the deposit accounts independently. They can also decide, in their own discretion, as to what minimum documents are required for opening of accounts by minors.”

Banks are allowed to give further facilities like ATM, Debit Card, cheque book and net banking. Overdraft facility cannot be given to minor.

What do you think? RBI has taken right move? Do share your views in comment section.

Shitanshu Kapadia
Shitanshu Kapadiahttps://moneyexcel.com/
Hi, I am Shitanshu Kapadia founder of moneyexcel.com. I have written 1750+ articles on this blog. I am PGDBA(marketing), engaged in blogging for 5 years. Moneyexcel blog is ranked as one of the Top 10 Personal Finance Blog in India. The purpose of this blog is to spread financial awareness and help people in managing money. Please note that the views expressed on this Blog are clarifications meant for reference and guidance of the readers to explore further on the topics. These should not be construed as investment advice or legal opinion.
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