No Preclosure charges : RBI

Its a very welcome move by RBI to forego preclosure charges, that is levied my banks on many loans. It will come as short in arm for many consumers and a could be stinker to banks.But it would have real fuel, when it is implemented for existing loans, but RBI is planning to do it for new loans only

Here is how the stats work

Say example loan amt : 2000000.
Tenure is 10yrs and Interest 10%

then if any other bank offer you 9% then you are free will to preclose high interest loan and going with lower interest there by reducing your EMI to great extent..

Impact of directive by RBI, could trigger competitive and cheaper retail loans, which again shot in the arm for real estate sector which has been in downside for past one year.