Monday, November 29, 1999

CCI chief recuses from case on banks pre-payment penalty case

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New Delhi, June 16 (PTI) Competition Commission chief Dhanendra Kumar has recused himself from hearing a case relating to prepayment penalty on loans charged by banks, against whom evidence of wrongdoing has been found, saying he himself is a borrower. About two dozen banks and housing finance companies, including ICICI Bank, HDFC, LIC Housing Finance, Deutsche Postbank, are under the CCI''s scanner for charging penalty for foreclosure of home loans. The Commission is hearing out the parties after examining a report of Director General (Investigations), which found evidences against banks for misusing their dominant position and entering into anti-competitive agreements. "We often recuse ourselves from cases, if we have anything to do with the parties or the issue itself. For example, our chairman is not sitting during the proceedings of the bank penalty case because he has a home loan on himself," a CCI official said. The practice, officials say, is to ensure that parties do not cry foul or complain of a biased judgment. The CCI, sources say, is in the last lap of hearing parties in a prepayment penalty case and is expected to come out with a judgment within a month. Banks and financial institutions were also sent showcause notices before beginning proceedings. Thousands of borrowers are looking forward to the order as it would mean that borrowers can shift their credit to lenders offering lower interest. Currently, pre-payment charges range between zero and four per cent of the amount pre-paid by a borrower. The Competition Act, 2002, empowers the to penalise the lenders for adopting such practices to discourage customers from pre-paying home loans or ban the practice across the industry.

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