Foreign banks will introduce the dual interest rate system in India to attract more housing loan borrowers though the interest rates are in increasing mode. The housing loan products have already been rolled out by the leading foreign banks such as Hongkong and Shanghai Banking Corporation, Standard Chartered Bank, Deutsche Bank and Citibank by offering home loans on the fixed interest rate system for the period before the activation of the floating interest rate system. The reliable source of one of these banks revealed that these do not resemble the ‘teaser rate’ housing loan plans that had increased the concerns of the asset quality, being far more translucent.
Mortgage head of the foreign bank mentioned that after analyzing the capacity of the consumer to repay the loan the eligibility will be finalized. He further added that they will provide dual rate loan only after they feel that the consumer is able of servicing it even at 50 basis points (bps) over the fixed rate.