The Bank of India (BOI) has joined the club of banks that has waived pre-payment charges on housing loans. The BOI has abolished prepayment charges on home loans for both fixed and floating rate loans across all tenures, for both current and new borrowers, with an immediate effect. Earlier this week, the Central Bank of India too had waived pre-payment charges on floating rate home loans. Similarly, last month, leading banking sector players, including State Bank of India (SBI) and ICICI Bank had also canceled pre-payment charges on housing loans in line with the Reserve Bank of India (RBI) asking all banks not to recover pre-payment charges on floating rate loans with an objective to improve services for customers.

As stated by a BOI official, “The bank has decided to implement the Damodaran Committee recommendation on customer service. Accordingly, we have decided to give liberty to our home loan customers, both on floating rates as well on fixed rates, to switch whenever they want to do so irrespective of the source of funds, including takeover by another lending institution.” Up till now, BOI was charging 2.5 per cent pre-payment penalty on the outstanding loan amount.