Photo by RamNMarch 25, 2010
SBI's Home Loan Relief Plan Extension Post-Budget 2010
Following the announcement of the 2010 budget, the State Bank of India (SBI) has provided a glimmer of hope for individuals with home loans by suggesting a potential extension of its home loan relief initiative.
SBI, a dominant lender within India, has signaled its intention to potentially maintain its highly discussed 8% home loan scheme, albeit with minor adjustments. A high-ranking SBI official indicated that while the bank typically modifies products to align with its liquidity position, it rarely discontinues a product entirely. However, a formal announcement regarding the extension of the offer, which is scheduled to conclude on March 31st, is yet to be made by the banking giant.
Competition and Regulatory Concerns
Major competitors, such as ICICI Bank and the mortgage lender Housing Development Finance Corporation (HDFC), initially replicated SBI's scheme but subsequently withdrew their offerings due to disapproval from the Reserve Bank of India (RBI) and tightening liquidity conditions.
Despite regulatory pushback, SBI officials maintain that the plan stands as one of the most advantageous home loan offerings available, citing its positive impact on associated sectors such as cement and steel, along with its contribution to overall economic expansion. The program is viewed as a highly effective initiative by the institution and as a substantial contributor to wider economic progress.
RBI's Disapproval of "Teaser" Schemes
However, the Reserve Bank has expressed reservations regarding these so-called "teaser" schemes, primarily due to apprehension about customers' capacity to handle elevated standard interest rates after the initial period expires.
RBI Deputy Governors, Usha Thorat and K C Chakrabarty, have publicly voiced their concerns about the scheme. “Teaser rates…