The finance ministry may prevent PSU banks from introducing new teaser home loan schemes, as it wants to avert a rate war that can lead to a rise in non-performing assets of the banks.
Major private sector banks HDFC and ICICI Bank reintroduced their teaser loan schemes this month after State Bank of India decided to carry on with its scheme, despite credit-tightening steps taken by the Reserve Bank of India.
The ministry is eager to halt more PSU banks from giving teaser rates before July 1, when the base rate for loans becomes effective.
A finance ministry official said, “There could be unviable lending without keeping in mind the borrower’s repayment capacity. Some of the schemes under teaser rates have been hugely popular and prompt customers to switch over. Other banks may be forced to come up with similar schemes”.
The government also request PSU banks to provide information of the number of loans offered under such schemes. From the public sector banks, SBI, Canara Bank, Union Bank of India and IDBI offered teaser loan schemes.
After the base rate becomes effective, the banks will have to rechart their tactic as base rate system will make the process of deciding reference rates for floating rate loans more transparent.