Base rate not to affect existing home loan borrowers: ICICI

ICICI Bank today said the new base rate regime, which has come into effect from July 1, will not impact the interest liability of existing home loan borrowers unless they voluntarily shift to the new system.

"As far as existing borrowers under the present BPLR regime are concerned, the interest rate will run till maturity. But if they want to shift under the base rate, then only there will be a change," ICICI Bank CFO N S Kannan told PTI when asked whether new regime would increase the interest liability of existing home loan borrowers.

ICICI Bank is one of the largest home loan lenders in the country in addition to State Bank of India and HDFC.

The country's largest private sector lender ICICI Bank has fixed the base rate, the minimum lending rate, at 7.50 per cent effective from July 1.

The new regime ensures transparency in lending system and guard against cheaper credit to lucrative corporate sector at the cost of other borrowers.

"The base rate will be applicable on new loans as well as those loans which will come up for renewal," Kannan said.
    
The final lending rate will not change drastically. The ultimate rate charged to borrowers will continue to remain same and hover around the same level, he added.
    
The new system replaced the benchmark prime lending rate (BPLR) system. Though BPLR of the banks ranged between 11 per cent and 17 per cent, banks used to provide credit below BPLR to borrowers with high credit ratings.