A recent press report said that the unlike ICICI and HDFC, other banks and housing finance firms might not come out with schemes offering dual interest rate housing loans on the back of higher provisioning norms stipulated by the Reserve Bank of India (RBI) for such advances.
Reports said that Edelweiss Housing Finance (EHFL) which launched a dual interest rate housing loan plan about two weeks ago, is considering a review of the scheme, he added.
Recently ICICI Bank and HDFC had come out with dual rate schemes where the interest rate is fixed for the first 2-5 years and subsequently, it is linked to the banks’ respective base rates. The RBI has fixed an additional 2% standard asset provisioning norm for dual rate loans (popularly known as teaser loans).
State Bank of India (SBI) has discontinued its popular teaser loan scheme. Canara Bank executive director Ms. Archana S. Bhargava said that the bank also has no plans to float dual interest rate loan schemes.
Reports said that industry experts have also accepted that the higher provisioning norms have put pressure on the margins of lenders.