The banks’ move will hurt consumers even though not RBI’s intention
By Vipin Agnihotri
I
It is worthwhile remembering that in the April credit policy, the Reserve Bank of India minimized the risk weightage on the home loans below Rs 20 lakh and expressed the hope that banks will pass on the benefits to the customers. On every loan that a bank advances, a bank has to seta aside capital in its books.
If experts are to be believed, the extent of capital needed is judged by the risk weightage or the regulators perception of the ‘riskiness’ of the loan. This risk weightage was m
This clearly emphasizes the point that for every Rs 100 of home loans, a bank will now be required to set aside capital of Rs 4.50 against Rs 6.75 earlier. This is considering a 9 percent capital to risk weightage ratio that banks are now required to maintain.
However, with an exception of Union Bank of India, a number of banks have raised interest rates on home loan above Rs 20 lakh. For example, Punjab National Bank have raise interest rates on floating and fixed rate loans above Rs 20 lakh by 100 basis points on the card rate while Oriental Bank have raised rate by 75 basis points for floating rate loans and 125 basis points for fixed rate loans over the card rate for loans that are above Rs 20 lakh.
When The India Street asked senior bank officials who raised rates, instead of passing the benefits to the existing customers, they justify their stands by saying, “The move to lower risk weightage frees bank’s capital which can then be used to increase lending or minimize lending rates for the existing customers. We have decided to lend more.”
India’s biggest bank, State Bank of India has decided not to minimize interest rate on home loans below Rs 20 lakh and the most aggressive home loan lender, ICICI bank, too seems to have taken a similar stance. Other banks such as Allahabad bank and Dena bank too are not considering revising their rates.
2 comments:
The PNB has santioned the loan of RS. 22 lakhs for 20 years to me some 8 months back. Now they have increased the interest rate by 1%. My flat is under construction and i have not taken full disbursement yet. I asked them that now i want less than Rs. 20 lakh loan disbursement and remaining amount i will arrange myself, but the bank is insiting me that the higher rate of interest will be applicable to you since you have been santioned above 20 lakhs. Can somebody tell how i can come out with this situation?
The PNB has santioned the loan of RS. 22 lakhs for 20 years to me some 8 months back. Now they have increased the interest rate by 1%. My flat is under construction and i have not taken full disbursement yet. I asked them that now i want less than Rs. 20 lakh loan disbursement and remaining amount i will arrange myself, but the bank is insiting me that the higher rate of interest will be applicable to you since you have been santioned above 20 lakhs. Can somebody tell how i can come out with this situation?
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