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I took a loan of Rs 4,00,000 from ICICI Bank two years ago to purchase a plot of land in Hyderabad. I now want to repay the entire amount.
When I contacted the home loan section, they advised me not to prepay the loan as it attracts a 10% penalty and a 2% surcharge on the principal outstanding.
What must I do?
- Satish Chand Valluru
Read the loan agreement with the bank very carefully. See what it states about prepayment.
I personally feel a 12% prepayment charge (10% + 2%) is way too high. It is very unlikely that a reputed bank like ICICI will charge such a high prepayment penalty.
Even if the documents provide for such a high charge, I am confident that, if you approach the higher authorities, you may get some help.
State the facts and inform them that such a high charge was never brought to your notice before the completion of the documentation.
You can mail the Head of Service Quality at headservicequality@icicibank.com
If you are not satisfied with the response (though a bank like ICICI is likely to respond positively to your complaint), you may complain to the banking ombudsman in your area.
Click here to find out details of this little known though extremely useful initiative from the Reserve Bank of India.
To see the other queries answered by Harsh Roongta, read Home loan without a home?
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