SC to decide on loan prepayment charges
The State Bank of India filed an appeal in the Supreme Court against the National Consumer Disputes Redressal Commission's order regarding pre-payment charges payable by a loan consumer who repays the entire loan ahead of the schedule. The Supreme Court wApnaloan.com Research Bureau
18 Sep 2007
The State Bank of India filed an appeal in the Supreme Court against the National Consumer Disputes Redressal Commission\'s order regarding pre-payment charges payable by a loan consumer who repays the entire loan ahead of the schedule.
The Supreme Court will hear this appeal on September 18, 2007. The National Consumer Disputes Redressal Commission held such levies as unfair and restrictive trade practices.
The commission also said that the loan consumer's right to avail retail loans at a lower rate of interest cannot be curtailed by such prepayment clauses.
A bench headed by Justice B N Agarwal sought reply from Usha Vaid, the complainant, on whose petition the commission had passed the order. The reply is to be filed within four weeks.
According to SBI, prepayment charges/premium is designed to protect a lender against potential losses it may incur if a loan is paid earlier than the loan tenure expiry.