| State Bank of India (SBI), India’s largest public | | | | borrowers when the rates go up. |
| sector bank, will continue with its limited period offer on | | | | Teaser loans refer to step-up loans where interest |
| home loans, popularly known as ‘teaser rates’ | | | | rate is a low fixed rate in the initial years but is |
| till the end of the current financial year, escalating the | | | | benchmarked to market rates after 2-3 years with a |
| differences with RBI on the issue. | | | | minimum floor. |
| SBI, on Tuesday, launched its new scheme for Naval | | | | Almost all banks are set to review their limited period |
| Personnel, wherein it will offer home, auto and personal | | | | offers, which will be expiring in the next one month. |
| loans at 50 basis points lower than the floor rate. | | | | Some banks such as Axis Bank has already |
| “They’ve not objected. SBI would not do | | | | withdrawn similar schemes following concerns raised |
| anything which RBI objects to,” SBI chairman OP | | | | by RBI. |
| Bhatt said on the sidelines of a function in Delhi on | | | | RBI’s decision to hike the cash reserve ratio (CRR), |
| Tuesday. | | | | the portion of deposits that banks are required to |
| The central bank has over the past one month raised | | | | maintain with the central bank, by 75 basis points to |
| the issue of special rate home loans or what it calls | | | | 5.75% will also make it difficult for banks to offer these |
| teaser loans repeatedly. | | | | schemes. The CRR hike is expected to mop up |
| RBI deputy governor Usha Thorat had on Monday | | | | around Rs 36,000 crore from the system. |
| said banks should have taken whatever message | | | | Mr Bhatt also hinted that lending rates may rise from |
| was given. Ms Thorat had last month said: “Teaser | | | | the second quarter of 2010-11. “So far as bank |
| rates are increasingly being offered, which is a cause | | | | lending rates are concerned, I do not expect rates |
| for concern.” | | | | going up before May-June,” he said. |
| RBI deputy governor KC Chakrabarty had also | | | | SBI is looking to achieve loan expansion at the rate of |
| expressed his displeasure stating that the benefits | | | | 16-18% this fiscal. “We are already at 17% and |
| should be extended to the existing customers as well. | | | | there is no immediate pressure on home loan interest |
| The central bank has also said banks need to explain | | | | rates,” said Mr Bhatt. RBI has projected credit |
| to their borrowers about the implications of such home | | | | expansion target at 16-18% for this fiscal. |
| loan rates and to appraise repaying capacity of the | | | | |