Pre payment charges by Bank after expiry of last accepted sanction letter

Hello Forum,

I've a query. These days banks both private and government are charging pre-payment charges on Cash Credit accounts, of 1%-4%, if customer decides to switch from the existing  bank to another bank. Reason may be poor services, high interest rates, wrong levy of pe al charges due to bank' s mistakes, higher charges being debited,  etc...

My question here is that.

1. Can a bank charge prepayment charges after the expiry of the last accepted sanctioned terms....?

2. Can a bank levy any penal charges for non-renewal of sanctioned terms to a customer even if customer had complied and submitted all papers to the bank well before due date.

3. If a bank levies these penal charges, even by mistake and informs customer to reimburse these charges while renewal of credit facilities and do not reimburse/repay, if renewal doesn't happens...? Can a customer claim these charges from bank afterwards....?

4. How can an Ombudsman help in this case. Rather, the question should be, does a banking ombudsman actually interfere and take any action against a bank in such case.

 

Replies (1)

1. Unless the terms are expired, it will not be transfer. So, till the existing loan is transferred, it is liable for the charges.

2. If the terms are not satisfactory, the loan may not get renewal. As such the agreement ends. There they cannot charge anything extra, unless any such terms agreed initially.

3. Depends upon actual position, which differs from case to case.

4. Yes, if it can be proved that it is bank's fault to charge the penalty.

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
18 August 2026
CA Semi Qualifies

Goyanka and Associates

New Delhi

CA Inter

View Details
Company
25 August 2026
Senior Accountant

MG Associates

New Delhi

CA Inter

View Details
Company
14 August 2026
Semi Qualified

Goyanka & Associates

New Delhi

CA Inter

View Details
Company
09 September 2026
SENIOR AUDITOR & ACCOUNTS MANAGER

Anupam Parashar & Co.

Ghaziabad

CA Final

View Details
Company
24 August 2026
Semi-Qualified CA/CA Finalist - Tax, GST, Audit & Accounts

Bharat Shah & Associates

Mumbai

CA Inter

View Details
Company
08 September 2026
Audit Executive

Thammana & Associates

Srikakulam

B.Com

View Details
Company
13 August 2026
Chartered Accountant (FP&A)

Client of Trellis Consulting

Gurgaon

CA

View Details
Company
29 August 2026
Chartered Accountant

Velionit Consulting PVT LTd

Mumbai

CA

View Details