Foreclosure to be free on floating rate home loans September 07, 2011 The Reserve Bank of India has asked banks not to impose foreclosure charges on floating rate home loans as it would transfer only interest risk to the borrower and not the credit risk. Banks can, however, impose foreclosure charges on fixed rate home loans.
“Banks may address their asset liability mismatch issues by recourse to the interest rate swaps market. Floating rate loans pass on interest rate risk from banks, which are much better placed to manage it, to borrowers, and thus banks only substitute interest rate risk with potential credit risk,” the RBI said in a release. The central bank said, along with the Indian Banks' Association (IBA), it would examine issues of mental harassment of bank customers and monetary compensation for customers with special grievances. “Issues that may receive attention in the analysis would be: Whether only actual loss should be considered for compensation; whether mental harassment issues can be codified for compensation and whether compensation should be capped,” the release said. The RBI would also determine whether policies of bank boards on compensation should include mental harassment as a ground for compensation. These decisions were taken at the annual conference of banking ombudsmen held at central bank headquarters in Mumbai on Monday, which was inaugurated by RBI governor D Subbarao. A senior official who attended the conference said, “Banks will eventually have to implement these directives of the RBI. The issue of compensation for mental harassment came up as a bank customer was demanding Rs 4 crore compensation from a mid-sized bank in a dispute over Rs 10,000.” Subbarao said, “Rendering good customer service is like prevention and is better than the cure, which is various grievances redressal mechanisms.” Ombudsmen will annually share information on complaints received and resolved with the local media On Tue, Sep 6, 2011 at 4:03 PM, RAJESH DESAI <[email protected]> wrote: > HDFC eyes 20% loan growth ahead, says Keki Mistry > > > > <http://www.moneycontrol.com/india/stockpricequote/finance-housing/housing-development-finance-corporation/HDF> > > HDFC , the nation’s largest housing finance company, has launched a new > fixed rate home loan scheme called as 'fixed first'. Home loan borrowers can > avail loan at a fixed rate for the initial three or five years under the new > scheme. > > Keki Mistry, vice chairman and chief executive officer of HDFC told > CNBC-TV18 that this product is for people, who do not want to take any risk > on interest rates and want to freeze those rates. > > “We believe that we should be looking at loan growth of around 20%,” added > Mistry. > > *Below is the edited transcript of the interview. Also watch the > accompanying video. * > > *Q: What is the trigger for this new fixed floating product that you > announced yesterday? Are you implying that you don’t see rates rising much > from here on because you are giving a five year fixed product?* > > A: No. There are a large number of people who come to us and say that they > are worried about interest rates going higher and hence, they want to fix > their liabilities. So for those kind of people, who do not want to take any > risk on interest rates and want to freeze those rates, this product has been > introduced. > > It is in addition to the normal floating rate loan product. So, you have a > choice of either taking a floating rate loan product if you believe rates > have peaked. If you believe that rates are going to remain high, then you > can take a three-year to five-year fixed product, the choice is yours. > > *Q: The RBI still defines a teaser loan as one that is fixed first and > floats thereafter, so have you checked with them about provisioning?* > > A: We have spoken informally to the National Housing Bank. Teaser loan is a > product, where in the initial period, the interest rate is lower and by > offering a lower interest rate, a person gets attracted to the loan and > takes it. > > In our product that is not the case, if you see the fixed rate product > barring one slab, in every other slab, the interest rate is a little higher > in the fixed portion in the first three years than what it is in these > floating products. So, this is clearly not a teaser rate at all. > > *Q: There are so many concerns with respect to global and domestic growth. > Will you have to scale down your loan growth forecast?* > A: We believe that we should be looking at growth of around 20%. > > On Tue, Sep 6, 2011 at 12:39 PM, RAJESH DESAI <[email protected]>wrote: > >> HDFC launches fixed rate home loan scheme, others to follow >> >> Largest housing finance company >> HDFC<http://www.moneycontrol.com/india/stockpricequote/finance-housing/housing-development-finance-corporation/HDF>on >> Monday launched a new fixed rate home loan scheme christened as 'fixed >> first'. This product is on similar lines with ICICI >> Bank<http://www.moneycontrol.com/india/stockpricequote/banks-private-sector/icici-bank/ICI02>'s >> home loan product, launched three weeks back, that had offered the >> benefits of repaying loan in the first one to two years at fixed rates in >> the range of 10.50-11.75% depending on loan amount. >> >> Home loan borrowers can avail loan at a fixed rate for the initial three >> or five years under the new scheme. Thereafter, the loan will switch >> automatically to HDFC’s adjustable rate home loan (ARHL) product, which >> is an existing floating rate scheme. >> >> *The new scheme rates:* >> >> *Loan Amount * >> >> *(Rs in Lakh)* >> >> *3 Year Rate of Interest (%)* >> >> *5 Year Rate of Interest (%)* >> >> Up to 30 >> >> 10.75 >> >> 11.25 >> >> 30.01 – 75 >> >> 11.25 >> >> 11.50 >> >> Over 75 >> >> 11.75 >> >> 11.75 >> >> >> >> >> >> >> >> “This option is in addition to all the existing home loan options >> being offered by HDFC. This option is for customers seeking to lock in >> their home loan interest rates and not take risk on interest rates moving >> up in the initial years,” said a release issued by the mortgage lender. >> >> Meanwhile, two consecutive launches of fresh home loan products have >> prompted other industry players to join the bandwagan. >> >> “We will certainly review our product lines. Our Advantage – 5 was a super >> hit scheme. But we had to discontinue it complying with the regulator. The >> scheme was of teaser nature,” V K Sharma, chief executive, LIC Housing >> Finance<http://www.moneycontrol.com/india/stockpricequote/finance-housing/lic-housing-finance/LIC>told >> Moneycontrol.com. >> >> Advantage 5 had offered fixed rate of interest at 9.25% for 5 years and >> thereafter on floating basis. >> >> HDFC's new scheme rates are higher than the existing rates offered by >> ARHL. The current floating rates are as follows: for loans up to 30 lakh >> is 10.75%, for loans Rs 30 - 75 lakh it is 11% and for loans above Rs 75 >> lakh it is 11.50 %. All are based on the current retail prime lending rate >> (RPLR). HDFC's RPLR is at 16.50%. >> >> Interestingly, HDFC's new scheme gives some discount as compared to its >> existing fixed rate scheme that offers rates in the range of 12.25-12.75% to >> be frozen for next 20 years. >> >> "RBI might take a call on all these fixed rate schemes. It is teaser rate >> only in disguise. Some lenders are offering it to customers very tactfully," >> said a top executive from an institution, engaged into lending business. >> >> Customers can apply for HDFC's new scheme before October 31 and avail of >> the first disbursement on or before November 30, 2011. >> >> According to a market consensus, the Reserve Bank of India has almost >> reached the end of rate hike cycle. In next one or two quarters, it might >> start slashing rates gradually. Following this, lenders too will have >> to pass on the benefit to their customers. >> >> Sensing this, most of the lenders now want to fix current high rates for >> longer terms. Hence, they are keen on bring such fixed rate products, said >> market watchers. >> >> *Saikat Das* >> >> [email protected] >> >> >> -- >> EQUITY BULL >> > > > > -- > EQUITY BULL > -- EQUITY BULL -- You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected]. To unsubscribe from this group, send email to [email protected]. For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en.
