The largest lender of the country, State Bank of India has requested Reserve Bank of India to remove the higher provisioning which it has imposed on teaser loans.
Some time back, RBI had increased provisioning on teaser loans as a step towards discouraging the continuace of such loans.
If SBI has to make this provision, then considering its total portfolio of Rs 32000 crore in this segment, it has to make provisioning of nearly Rs 400 crore.
The bank has requested RBI to waive off provisioning in this category for loans below Rs 20 lakh as they should be considered as priority sector loans. "Loans below Rs 20 lakh come under priority-sector lending. The government is encouraging affordable housing in urban areas, especially in small towns. If the provisioning for standard assets is more, it will put burden in the form of a higher interest rate", a senior SBI official said.