GSRK Estates
Home Services Projects Media Center About Us Contact Us Download Career
19 SEZs in Telangana, Andhra P
 
Tax Benefit for 1st Home Buyer
 
NIMS-Rangapur building, 400 ac
 
Report seeks Rs. 750 cr. for d
 
ORR Growth Corridor, ORR Phase
 
Hiring back as attrition soars
 
Irrigation Projects in Mahaboo
 
State entrusts protection of g
 
Hyderabad IT investment region
 
AP proposes 400 Acre electroni
 
Andhra Pradesh inks MoUs for R
 
Govt cancels illegal layouts i
 
Companies and states oppose La
 
Land acquisition bill - Revise
 
HMDA master plan covering 6000
 
AP has the most number of SEZs
 
Peugeot may choose Chittoor to
 
MIC Electronics new LED produ
 
Mahindra to set up tractor man
 
Capgemini has more staff in In
 
Show All News
Media Information
New rates not for old home loans

Published & Updated as on - 2010-02-21


New Delhi, Feb. 11 -- Central bank proposes. Commercial bank disposes.

While the Reserve Bank of India (RBI) is frowning at "teaser" home loan rates that come cheaper to new customers, banks say they cannot honour old loans with the same rate as it could hurt their profitability.

RBI had raised serious concerns over teaser rates saying that these lack transparency and may lead to unviable loans - called bad assets. It also wrote a letter to the Indian Banks Association seeking explanation on teaser rates and asking banks to extend the same benefits to existing and old customers.

Keki Mistry, vice-chairman & CEO, HDFC told Hindustan Times that his firm had not received any letter but added that interest rates were a function of the overall cost of funds for banks. Some bankers said the cost depended on fixed deposit rates that cannot be altered easily.

"When the cost of funds come down the benefits are transferred to both old and new customers. However, the cost of fund has to come down in the existing balance sheet. It is so that one raises Rs 100 crore or Rs 500 crore and give out loans of that amount. But when the cost of fund changes, it changes only for the new money that comes in and so the existing customers continue to be at the same rate. These are the complexities," Mistry said.

Last week, RBI deputy governor K C Chakrabarty said that banks should not exclude one customer segment from a benefit extended to another.

Banksers squirm at this.

"Such rates have been offered to new customers based on their repayment capacity and whether they would be able to increase their monthly payment. It cannot be extended to the old borrowers whose credit repayment analysis have been based on other criteria," a senior official at a public sector bank said on condition of anonymity.

However, J.M. Garg, chairman and managing director, Corporation Bank said that the contours of interest rates may change after the implementation of the proposed referential base rates slated to be in effect from April 1.

Source: Yahoo Finance 11/2/10  

Newsletter Subscription
 
 
Copyright Reserve to © GSRK Estates 2009-10 | Privacy Policy | Disclaimer | Terms of Use | Site Map -- Web Technology ETimes (india)