Davos: Defending the teaser rate scheme, State Bank of India (SBI) Chairman O P Bhatt today said that over 2.92 lakh borrowers availed themselves of the scheme to buy their dream homes.
"About 2.92 lakh people were given home loans at teaser rates (8 per cent or the prevailing rates) ... totalling about Rs 10,000 crore," he said, while talking to reporters here on the sidelines of the 41st World Economic Forum (WEF) meeting.
Under the teaser rate scheme, banks provide credit at lower rates for first few years and subsequently raise the interest rates.
The Reserve Bank of India (RBI) has been raising concern about the teaser rate scheme fearing that it might increase home loan defaults in the times to come.
Taking cue from RBI, several other public and private sector lenders including ICICI Bank, HDFC and Punjab National Bank (PNB) have withdrawn their schemes, while SBI has extended its scheme uptil March 31, 2011.
On whether the SBI would continue the scheme beyond March 31, Bhatt said his successor will take a view. Bhatt is due to retire in March, 2011.
He also stressed that the scheme would not create any problem for the bank, as 80 per cent of the loans were given below Rs 10 lakh and the KYC (know your customer) norms were followed while sanctioning loans.
Ruling out any problem on account of teaser loan scheme in future, Bhatt said, the non-performing assets in the home loan segment were very low.
He also recalled that the teaser loan scheme was started by the bank in consultation with the Indian Banks' Association (IBA) as a stimulus to help the Indian industry to combat the impact of the global financial crisis.
The scheme, he added, did help the housing sector and also the other industry segments like cement, steel etc.
On his plans after retirement, Bhatt, who heads the largest bank in the country, said he has some offers from the private sector but has not yet made up his mind.