Allow customers to pre-pay floating rate loans without penalty: RBI

In the interest of their consumers, banks should consider the possibility of allowing them to pre-pay floating rate term loans without any penalty, according to the Reserve Bank of India.

In its first bi-monthly monetary policy statement, the RBI said that banks should also not take undue advantage of customer difficulty or inattention.

Instead of levying penal charges for non-maintenance of minimum balance in ordinary savings bank accounts, banks should limit the services available on such accounts to those available to Basic Savings Bank Deposit Accounts and restore the services when the balances improve to the minimum required level.

Banks should not levy penal charges for non-maintenance of minimum balances in any inoperative account, the RBI said.

Further, banks should limit the liability of customers in electronic banking transactions in case where they are not able to prove customer negligence.

Pointing out that consumer protection is an integral aspect of financial inclusion, the Reserve Bank said it proposes to frame comprehensive consumer protection regulations based on domestic experience and global best practices.

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