Home
loan customers need no longer worry about transferring their loans from
one bank to another. In line with the recommendations of the Damodaran
Committee on customer service in banks, the Reserve Bank of India (RBI)
on Tuesday abolished foreclosure charges, levied by banks on prepayment
of home loans with floating interest rates.
Also, banks should have a board-approved transparent policy on pricing
liabilities and ensure that the variation on single-term deposits of R1.5 million and above and other term deposits is minimal.
The
RBI has asked banks to initiate steps to allot unique customer
identification code (UCIC) to all customers. Similarly, existing
individual customers may also be allotted UCIC by end-April 2013.
UCIC
will help banks identify a customer, track the facilities availed,
monitor financial transactions in various accounts, improve risk
profiling, take a holistic view of customer profile and smoothen banking
operations for the customer.
While some of the Indian banks have
already developed UCIC, there is no unique number to identify a single
customer across the organisation in many banks. In this regard, the
government has already initiated some measures as a working group
constituted by it has proposed the introduction of unique identifiers
for customers across different banks and financial
institutions.
Banks have also been asked by the RBI to offer a
‘basic savings bank deposit account’ with certain minimum common
facilities and without the requirement of minimum balance to all their
customers. This is being done with a view to providing fillip to the
financial inclusion agenda. Banks were advised in November 2005 to make
available a basic banking ‘no-frills’ account with either ‘nil’ or very
low minimum balance as well as charges that would make such accounts
accessible to vast sections of the population.
According to the
RBI's monetary policy statement 2012-13, foreclosure charges levied by
banks on prepayment of home loans were resented upon by home loan
borrowers, especially since banks are hesitant in passing on the
benefits of lower interest rates to the existing borrowers in a falling
interest rate scenario. Also, foreclosure charges are seen as a
restrictive practice deterring borrowers from switching
over to cheaper available sources.
The RBI feels the removal of
foreclosure charges/prepayment penalty on home loans will lead to a
reduction in the discrimination between existing and new borrowers. The
competition among banks will result in finer pricing of home loans with
floating rate. Though many banks have, in the recent past, voluntarily
abolished prepayment penalties on their floating rate home loans, there
is a need for ensuring uniformity across the banking system in this
regard, the policy statement adds.
As far as deposits are
concerned, the RBI has stipulated that banks should not discriminate in
the matter of interest rate paid on deposits, except in respect of fixed
deposit schemes specifically meant for resident Indian senior citizens,
etc.
Financial Express, New delhi, 18-04-2012