Fees charged by lenders when you close a loan before the scheduled tenure. RBI circular of May 2012 explicitly bans foreclosure charges on floating-rate home loans for individual borrowers. Fixed-rate loans may have charges of 1-3%.
You want to close your floating-rate home loan early. The bank says 'there's a 2% foreclosure charge.' This is ILLEGAL per RBI rules for individual floating-rate loans. Show them the RBI circular (DNBS.CC.PD.No.307/03.10.01/2012-13) and refuse to pay.
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