Banks scramble to exit teaser home loan products as RBI cries foul
12 Feb 2010
The central bank has stepped in to help customers who opted for floating interest rates on their home loans but failed to derive any benefit in almost two years.
In a letter to the Indian Banks Association (IBA), the central bank has asked the lenders body why new home buyers have been offered lower interest rates, while these were not offered to existing borrowers.
Most of the schemes announced with the reduced rates are applicable to only new customers leading to protests by existing borrowers over differential treatment.
Customers expected that interest rates would fall but over the last one-and-half years existing customers have not seen the interest rates on their loans go down even though the RBI has slashed interest rates.
Banks have offered lower rates only to new customers and the RBI has flayed this discriminative policy in an extremely hard-hitting letter to the Indian Banks Association, according to sources.
The letter poses a set of questions and accuses the banks of being discriminatory.
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