Reserve Bank Of India [RBI] — wrongful charges on prepayment charges by lic housing finance ltd

Address: Chennai, Tamil Nadu, 600029

Loan ac. No.[protected] anir tech park private ltd.,
Lic housing finance limited, sanctioned a sum of rs.57.24 crores to anir tech park private ltd towards rental discounting loan to us on 16.3.2016. The offer was valid for 90 days. The rate of interest charged was very high at rs.12% p. A floating rate. It was very clear in the original sanction order that there will not be any foreclosure charges if the customer opt for floating rate and foreclosure charges applicable for fixed rate of interest.
Due to requirement of some documents which could not be made ready before the expiry of the validity of the offer, we requested for some 15 days time to submit the required documents and lic housing finance limited had consented finally.
Our loan application no.[protected] and following are the terms and conditions exact words stated in the most important terms and conditions;
"c (Rate of interest : floating rate 12.00 % pa.
Under floating rate period, prepayment charges are not applicable."

We requested for the extension of the validity of the offer from 16.6.2016 by our mail dt.9.6.2016 and as we requested for extension of the offer and the same was under consideration of the lic housing finance, it cannot be said that the original offer was lapsed on 16.6.2016.

As per the lic housing sanction letter, our loan offer was re-validated on 28.6.2016. Based on the lic information and communication, we hurriedly signed the loan agreement thinking that there would not be fresh clauses as it is only a re-validation. Re-validation cannot contain any clause which materially affect the original offer and in that case it should be only a fresh offer and a fresh file should have been given. However, in the loan agreement, lic housing finance ltd., seems to have included prepayment charges of 2 % even for fixed rate which originally exempted from prepayment charges and which was not informed specifically earlier. The loan was sanctioned alongwith our jv partner tvh housing in the same complex who owns similar space in other floors and who also availed the rental discounting loan. When they prepaid similar to our prepayment, they were charged only 1% whereas we were charged 2 % which itself discriminatory.

When we realised and noticed the changes after hurriedly signing the loan agreement, we represented to their area manager mrs. Sasirekha and territory manager mrs. D. Shanthie, who promised nil charges and even confirmed the same before our chairman. Pl. See the letter from lic housing finance dt.2.8.2017 page wherein the area manager confirms yes.
Lic housing interest rates were blood sucking rate of 12% which is very very high for a company wherein major share and funds are from lic of india, which is formed by a parliament enacted act, in 1956 formed for the benefit of the people of india.in view of our urgent requirement, the partly state owned company had fleeced like a third rate private company and putting additional clauses against the interest of the borrowers in a deceitful and deceptive way.

As per the official website of lic housing finance limited following are the clarifications in faq section
What if i repay my principal amount in lumpsum?

Prepayment charges are applicable @ 2% on the principal repaid.

Prepayment charges are not applicable on floating rate scheme.

Also prepayment charges issue would arise only if there is a clause for lock-in period and in our agreement of there is no lock in period.

We have represented to the national housing bank, wholly owned subsidiary of rbi whose function is

“... To operate as a principal agency to promote housing finance institutions both at local and regional levels and to provide financial and other support to such institutions and for matters connected therewith or incidental thereto...” and whose vision is

Promoting inclusive expansion with stability in housing finance market

Normally, the nhb refinance the housing finance institutions at a concessional rate whatever their portfolios.
When we complained with national housing board, vide our registered letters dt.6.12.2018 there is no reply and reminder was sent on 26.2.2019.


As the rate interest charged by lic housing was abnormally high and based on the assurances given by their area manager and territory manager, we sourced another loan from a private bank carrying an interest rate of 9.5% and we have prepaid the outstanding balance of lic. Had lic been charging reasonable rate of interest, there was no need to any company to look and go for some other private banks. However, lic housing finance refused to release our documents and blackmailed us into paying a sum of rs. 84, 43, 727/- on 17.8.2017 being 2% foreclosure charges on the outstanding amount and thereafter they released the documents. This is totally unwarranted and unjustified as we have to switch over due to lic housing finance high rate of interest of 12%.
Lic is now asked to refund the illegal charges of rs.84, 43, 727/- along with interest at 18% from 17.8.2017 and are also liable to be dealt legally if they continue to avoid refunding our amount alongwith interest.

Anir tech park private limited
A unit of pioneer homes.
Sivalinga prasad [protected]