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Reports also said that such fixed-cum-floating housing loan schemes were withdrawn from the market this April after RBI expressed concerns that these might affect the asset quality of banks.