New Delhi: Monopolies and Restrictive Trade Practices Commission (MRTPC) has once again confronted the banks and this time the issue is pre-payment of loans. Banks blatantly discourage pre-payment of loans by charging penalties on such payments and making the process cumbersome. The practice of charging excessive fees when a borrower wants to convert his floating rate loan into fixed and vice versa has also not gone well with the commission.

The very fact that there is little or no transparency when it comes to such events has further aggrieved the commission. Banks have been consistently imposing pre-payment penalties on borrowers and many of the fees are negotiable. People with clout or right connections can get these fees waived, so there is not a level field for everyone regarding the fees, interest and charges for banking services.

MRTPC, had earlier taken strong exception to banks charging different Prime Lending Rates (PLR’s) to their customers and the method of determining the PLR pretty much shrouded under mystery. Moreover, the borrowers are not communicated the exact PLR’s and they way it will effect the interest rates on their loans.

MRTPC also found out that the banks are very quick in passing any burden of increase in interest rates to the borrowers while there is a considerable delay in passing on the benefit of any interest rate reduction. Deploring the banks discriminating policies on giving a discounted interest rate to attract new customers, while the existing borrowers faced the burden of high interest rates, MRTPC has instituted an inquiry into the matter.