Tuesday, November 3, 2009

HDFC, LIC Housing under CCI lens for loan pre-payment penalty

Abuse of Dominant Position:



Competition watchdog CCI has brought under its scanner several private banks and housing finance companies, including HDFC and LIC Housing Finance, for imposing penalty on pre-payment of loans.

The Commission, according to a CCI official, is scrutinising a complaint concerning pre-payment penalty from a customer against major home loan players like HDFC, LIC Housing Finance and Deutsche Postbank.

In contrast, public sector banks do not charge penality for the pre-scheduled foreclosure of loans.

The complaint has been filed under Section 3 of the CCI Act that deals with abuse of dominant position by companies.

Although the Commission has yet to take a view on the matter, the official said, if the lenders were found guilty of abusing their dominant position, the practice could be banned across the industry.

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