A recent press report said that banks and housing finance firms are avoiding the ICICI and HDFC dual interest rate housing loan schemes due to the higher provisioning norms stipulated by the RBI for such advances.
The RBI has recently fixed an additional 2 percent standard asset provisioning norm for dual rate loans (popularly known as teaser loans). SBI has also discontinued its popular teaser loan scheme.
Mr. Anil Kothuri Edelweiss, executive vice-president, Housing Finance (EHFL) has told the press that it is unlikely that other financial institutions will come up with dual housing loan rates on account of the provisioning requirement for dual rate loans.
He said that Adnan Abidi/Reuters EHFL, which had launched a dual interest rate housing loan plan is considering a review of the scheme.
Reports said that ICICI Bank and HDFC bank have come out with dual rate schemes with a plan of acquiring a bigger share of the housing loan market. It added saying that the scheme offers rates which will be fixed for the first 2-5 years and subsequently, it will be linked to the banks’ respective base rates.