National Housing Bank also seems to be in agreement with the stance taken by Reserve Bank of India that prepayment penalty on floating rate home loans be removed.

NHB is planning to soon come up with directives which will instruct housing finance companies (HFCs) to waive off prepayment penalties from such loan types.

"We will soon bring guidelines to remove prepayment penalties on all accounts," R Verma, chairman and managing director, NHB said.

"There has to be a level playing ground for borrowers at large. We are currently examining the situation connecting our every member (read HFC). We are also consulting the RBI regarding this. HFCs cannot restrict borrowers in a perfectly competitive market," added he.

So far these HFCs were not charging any preclosure penalty in case the customer was doing so with his own funds. But now, NHB's directives will be instructing them to waive penalties even if the customer precloses his loan with money borrowed from some other lender.

Verma said, "We have discussed all about it with HFCs. We are also pushing for our own Fair Practice. We are encouraging all HFCs to imbibe the practice relating to customers service and grievances."