Transparent pricing of loans
MONETARY POLICY MID-TERM REVIEW 2007-08/ SUPERVISION AND REGULATION
| Y V Reddy, governor, RBI, said, "On an informal level I have told bankers that on repricing of housing loans, there has been a lot of criticism. And we may have to take a strong view if banks do not ensure fair contracts and fair pricing." |
| The immediate reason for this seems to be the fact that banks have raised their floating home loan rates by as much as 4 percentage points over the last one year. Fixed rate home loans carry a reset clause after two-five years depending on the tenure of the loan. |
| "We have got certain complaints about non-transparent pricing that is why we want banks to assure us that it is not the case. |
| Even fixed rates, apparently have a clause, which says it may be changed if something happens. So the so-called fixed rate is not all that fixed. Hikes have to be reasonable. That is what we want," said Reddy. |
| Though some of the banks have reduced rates as a part of the festival offers, the apex bank has pointed out that the cuts are only for the new customers. |
| Currently, the existing borrowers have the choice to either move to another bank offering lower interest rates or pay a charge and close their existing loan account and open a new loan account with the same bank. |