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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LIC Housing cuts lending rates by 75 bps

LIC Housing Finance on Wednesday announced a reduction of 75 basis points in interest rates for existing home loans with effect from 1 January.

The cut is on EMIs falling due on 1 January, 2009 and payable on 1 February, 2009, the company said in a statement.

The move was consequent with a reduction in cost of funds, it said.

For new customers, it had already slashed interest rates from 17 December. For loans up to Rs20 lakh and up to five years, the lending rates stand at 9.25%.

For loans up to Rs20 lakh and above five years, LIC Housing Finance has reduced lending rates to 9.75%.
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