RBI dy governor hints on extra provisioning on dual rate loans
By Joseph Samson
Sep 7, 2011
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The recent inception of dual rate loans in the lending segment again has raised questions on them being teaser loans or not. Questions continued in line that if these loans were teaser loans then would the respective lenders be directed to do additional provisioning on them.

Speaking in this regard, deputy governor of Reserve Bank of India, Mr K C Chakrabarty said that these lenders might have to go for additional provisioning in case of these loans. He however clarified that RBI is not against teaser loans.

"We have not banned teaser rates. It is a legitimate product...if the rule is there, it will attract (additional provisioning)," Chakrabarty said.

Recently housing finance major HDFC announced the launch of a dual rate home loan scheme.

HDFC stance followed the largest private sector lender of the country, ICICI Bank.

"(A product) which is neither fixed nor floating is called teasing. So those interest rates which are a mixture of these two is called teasing," Chakrabarty said.


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