Mumbai, Sep 7: Reserve Bank Deputy Governor Subir Gokarn today said the central bank has no plan to ban teaser loans but warned that any such product will attract 2 percent additional provisioning.
“There is no attempt or intent on the part of the RBI to stop these products or prevent them any way. We are only saying that there is some additional risks involved in such products and hence more provisioning have to be made for any such products,” Gokarn told reporters on the sidelines of a Ficci seminar here.
“Whether they fall into such (teaser) category is something my colleagues in the regulatory department to decide, but the policy response to any such structure is that once it is deemed to satisfy any of those criteria of (teaser loans), it would attract higher provisioning requirement of 2 percent which we imposed recently.
“So if you have a product that falls into such a structure, then you will have to make the additional provisioning. It is very clear,” he said when asked whether the regulator is planning to bracket the recently launched home loan schemes by ICICI Bank and HDFC as teaser loans.
Recently ICICI Bank and mortgage lender HDFC had offered a fixed rate home loan products to attract more borrowers, as credit growth slowed in the face of rising interest rates.
While HDFC launched a ‘Fixed First' scheme under which interest rate for home loans will be fixed for three or five years and thereafter will attract floating rates, ICICI had late August launched a similar scheme.
HDFC's new scheme provides an option to home loan seekers to borrow long-term funds at fixed rate of interest ranging from 10.75 to 11.50 percent for three or five years and on the expiry of the fixed term, the loan will be reset to floating rates.
ICICI Bank had last month launched a similar scheme, which is akin to teaser home loan rates under which the rate of interest was fixed for one or two years. The borrower was required to shift to floating rate after the expiry of the fixed-term.
Earlier in the year, State Bank of India withdrew its teaser loan scheme after pressure from RBI. PTI
