NEERAJ MALHOTRA, ADVOCATE Vs. DEUSTCHE POST BANK HOME FINANCE LIMITED

JUDGEMENT

(1.) Therefore, case No. 15/2009 stands separated and is no longer clubbed with case No. 5/2009. The order in this matter (case no 15/2009) shall be delivered in due course of time.

(2.) THE present information has been filed under Section 19(1)(a) of Competition Act, 2002 (the Act) by informant Neeraj Malhotra, against banking and non banking financial companies for the levying of Prepayment Charges on the prepayment of amount of home loan taken. The opposite parties are private and public sector banking and non -banking financial institutions, engaged in the business of offering different types of loans including retail home loans, to the general public. Before examining the various elements of the alleged violation of the provisions of the Act , the findings of the Director General during investigation and the contentions of the Opposite Parties, it is necessary to look at the overall environment prevailing in the retail home loan market.

(3.) THE informant has alleged that the above prepayment charges are being levied if borrowers are prepaying the loans for refinancing its loan from another bank/NBFC at cheaper rate of interest. As per the informant the said practice of levying of prepayment charges discourage/ prevent the borrower from switching over to another enterprise which is offering loan at lower rate of interest. The informant also alleged that the said banking and non -banking financial institutions are charging penal interest towards prepayment charges on the entire loan amount and not only on the outstanding loan amount.