Mr. Om Prakash Bhatt, the chairman of State Bank of India, the largest lender of India, disclosed that his bank will continue its teaser home loan scheme despite concerns about the scheme. Mr. Bhatt who is due to retire in March said that since the non performing assets (NPA) are the lowest on these loans offered by his bank and when the bank gets the house of the customer as collateral it makes good sense to continue with it. The salient features of this loan are that during the initial few years the rates remain fixed and thereupon it becomes flexible.
According to Mr. Bhatt these home loans from SBI has benefited the common man as almost 80% of it are under Rs 10 lakh. He said that these loans were availed by about 2.92 lakh people. He put forth his view that there was no tease in the teaser home loan scheme and that these loans are devoid of risk and opacity. Moreover without diluting loan appraisal norms or documentation his bank made every Indian eligible for these loans.
HDFC which is one of the rivals of SBI was the first to air its concern regarding these schemes. However following the instruction of RBI banks continued with these schemes provided they followed its directive of setting aside additional funds to deal with the possibility of future defaults.
According to Mr. Bhatt these home loans from SBI has benefited the common man as almost 80% of it are under Rs 10 lakh. He said that these loans were availed by about 2.92 lakh people. He put forth his view that there was no tease in the teaser home loan scheme and that these loans are devoid of risk and opacity. Moreover without diluting loan appraisal norms or documentation his bank made every Indian eligible for these loans.
HDFC which is one of the rivals of SBI was the first to air its concern regarding these schemes. However following the instruction of RBI banks continued with these schemes provided they followed its directive of setting aside additional funds to deal with the possibility of future defaults.
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