new delhi a string of lenders including hdfc bank hdfc deutsche postbank home finance and lic housing finance have come under the glare of the countrys competition regulator for allegedly levying a penalty on consumers for retiring loans ahead of scheduleif the competition commission of india cci which is looking into the matter finds the practice anticompetition either the regulator or its appellate tribunal can ban it the practice across the industry and even impose a penalty on banks charging the levy said a person privy to the development the regulator is in the process of seeking information from these institutions the person said when contacted a senior cci official declined comment responding to an email from et indias largest mortgage lender hdfc said the business of a bank financial institution involves borrowing and lending and in the process the lending institution tries to run a matched balance sheet of assets and liabilities prepayments are essentially accelerated payments before the schedule any prepayment will disturb the assetliability match and in order to mitigate the negative impact of the prepayments the institutionsbanks charge a prepayment charge everytime when there is a prepayment from the borrowers it will not be feasible for the banks to prepay its lenders as its loan agreement with lenders may either not permit it or permit it only with certain charges notice period and may be subject to other conditions hdfc charges a maximum prepayment levy of 2 of the amount prepaid deutsche postbank home finance refused to discuss the issue stating that the matter was sub judice while hdfc bank and lic housing finance did not give their comments till now the banking regulator has not given any instructions to banks on a prepayment penalty when asked by newspersons rbi governor d subbarao said in mumbai on tuesday that complaints relating to such a levy have to be taken up with the ombudsmansome lenders impose the prepayment charge only if the customer decides to refinance the loan by borrowing at a lower interest from another institution according to an hdfc spokesperson the policies of hdfc have always favoured customers prepaying loans from their own savings for example there are no prepayment charges on part prepayments up to 25 of the opening balance or if the customer prepays his entire loan after three years from his own savings charges relating to loan prepayment have attracted borrower attention in the last one year after banks began lowering interest rates and were even willing to refinance existing loans to gain market share the countrys biggest lender state bank of india set the ball rolling with its 8 home loan early this year according to senior bankers while a prepayment levy is justified for fixed interest rate loans consumers think its unfair to tag it with floating rate loans more so since many banks do not pass on the full benefit to borrowers when interest rates come down but are quick to hike either the emi equated monthly installment or