There’s good news for those thinking of prepaying their home loans to lessen the EMI burden. The Reserve Bank of India (RBI) has directed banks not to recover pre-payment charges in floating rate loans.

RBI’s decision on home loans was taken at the Annual Conference of Banking Ombudsmen held in Mumbai on Monday, where the banking regulator had asked bank chiefs and the ombudsmen present to identify ten action points to further improve their customer service.

The central bank said customers should not be levied pre-payment charges as banks are better placed to manage interest rate risks than customers. In a statement highlighting the 10 action points to improve customer service, RBI said banks would however be free to recover or charge appropriate prepayment penalties in the case of fixed rate loans.

Besides the decision on home loans, the action points include measures to protect customer interest in unauthorized ATM transactions, and a policy for compensation to customers for mental harassment.