The National Housing Bank, NHB has banned all Housing Finance Companies from charging pre-payment penalty on home loans. In a notification, NHB has stated that Housing Finance Companies, HFCs cannot levy a charge for early payments of home loans. NHB has also directed all HFCs to have uniform rates of interests for old and new borrowers that have same credit or risk profile. The decision has been taken after the Reserve Bank of India carried a separate examination of the pre payment and pre-closure levy of the home loans. NHB has advised all Housing Finance Companies to ensure compliance with the notification with immediate effect. AIR Correspondent reports that the decision will allow home loan borrowers to have have greater freedom in choosing the entities to borrow from. Pre payment charges were restraining customers from moving around. The move will also enhance the credibility of housing finance systems.