Banking and monetary regulator Reserve Bank of India has said that it is likely that prepayment penalty on floating rate home loans would be waived off by the upcoming month.

With prepayment penalty waiver setting in, home loan borrowers will have a reason to smile.

"We will pursue with the banks to do this [ending prepayment penalties] as soon as possible. But should the system require some time to adjust to this, we are prepared to give them," said RBI Governor Subbarao.

Regulator of housing finance companies, National Housing Bank (NHB) has already implemented prepayment penalty waivers for all financial institutions under its regulation, under specified conditions.