SBI has planned not to resume teaser home loan scheme

By Pradeep Yuvaraj | August 1, 2011

A recent press report said that the country’s biggest lender State Bank of India has ruled out relaunching a dual rate scheme for home loans.

Reports said that its competitors ICICI Bank and HDFC have come up with a similar scheme to grow businesses. RBI defines teaser loan schemes as those offered at a low interest rate in the first few years, after which they are reset at higher rates.

Mr. Chaudhuri, Chairman of SBI, said that the bank has gone through teaser loan scheme by the Reserve Bank of India (RBI) as per the regulator’s view. He said that the bank has already provided (at two per cent) about Rs 500 crore for the teaser loan portfolio.

Reports said that SBI had launched its teaser loan scheme in early 2009, when it was sitting over a cash pile of nearly Rs 1 lakh crore, following a slowdown in the credit market along with the ripple effects of the global financial crisis. Other banks followed suit as SBI removed HDFC as the largest home loan lender.

Reports also said that such fixed-cum-floating housing loan schemes were withdrawn from the market this April after RBI expressed concerns that these might affect the asset quality of banks.

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About Pradeep Yuvaraj

Pradeep Yuvaraj is a Co-Founder and Director at Finerva Financial Solutions Private Limited, a financial education company focused on personal finance education. He has penned over 250 articles relating to Personal Finance and clocked over 500 hours of educating individuals on managing personal finance. He is a serial entrepreneur and has been associated with 7 Start-ups. His entrepreneurial experience spans industries as varied as Education, Gas Engineering, Automobile Design, Software development and more recently a Pure play presentation design company. Prior to turning entrepreneur in 2005, he has worked for 3 of the top ten companies of the world - Shell, ExxonMobil and Total SA. This experience included handling Branch Operations, Channel Sales and Business Development across 5 states over a period of 8 years. He holds an MBA from Symbiosis and an Electronics Engineering Degree from the University of Pune.

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