I took a home loan of Rs22 lakh from HDFC Ltd in 2008 for 15 years. Should I prepay part of the loan to reduce the equated monthly instalment (EMI)? Will I have to pay a prepayment penalty? Will I get tax benefit on the prepayment amount?
—Saurabh Sinha
You can prepay your loan and reduce your EMI burden. You will also get tax exemption for the principal repaid, subject to the maximum limit. As far as prepayment penalty is concerned, as per our information, HDFC does charge penalty for partial prepayments from own sources. But you will need to reconfirm this from them.
Banks keep charging minimum balance and annual fees on my three-four bank accounts, which I don’t use and don’t intend to do in the future. I am based in the US. The procedure for closing an account is very tiresome. I have requested the banks many times to close the account over phone or email but they ask me to surrender my ATM card. How else can I close my accounts? Is there a chance that my name would be included in the defaulters’ list for bank account charges ?
—Narendra Kaur
Technically, the banks can report you to the Credit Information Bureau (India) Ltd for default on account of bank charges in a savings account, but in practice it does not happen unless the amount is big. But it will be in your own interest to authorize someone in India to complete all formalities on your behalf so that the matter can be settled at the earliest.
Do senior citizens get extra benefits on fixed deposits (FD)?
—Shakti Menon
Senior citizens get higher interest rates on their FDs in the range of 0.2-0.5% depending on the bank and the FD tenure.
Is interest paid on post office monthly income schemes (POMIS) subject to tax deducted at source (TDS)?
—Manohar Tiwari
No, TDS is not applicable on the interest paid by the post office towards POMIS.
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