After long tenor of debate between the largest lender of the country, State Bank of India and regulator, Reserve Bank of India, SBI has decided to do away with its teaser home loan scheme.
The bank has announced that the teaser loans would end being in service from April 30, 2011.
The scheme would give way to a new floating rate home loan scheme with effect from May 01, 2011.
The new scheme would allow borrowers to avail loans at a spread over the base rate. SBI has revised its base rate to 8.5% recently.
Also pre payment penalty has been waived off along with a system of graded processing fees getting introduced.
For loans upto Rs 30 lakh, the spread will be 1% over base rate amounting to 9.5% while it will be 9.75% and 10.25% for loans in the range of Rs 30 lakh and up to Rs 75 lakh and above Rs 75 lakh respectively.
"The regulator has the final word. We cannot be in a state of perpetual conflict. Our move is in the overall interest of the country, economy and the bank," said Mr Pratip Chaudhuri, Chairman, SBI.