Axis Bank out with its second teaser rate
AXIS BANK Ltd has joined the home loan dual rate slugfest with a new product that offers a fixed interest rate of 8.25% per annum for the first two years and a floating rate of interest from year three. The product is called Power Advantage Home Loan.
After completion of the first two years, the floating rate of interest would be applicable at the mortgage reference rate (MRR) of the bank minus 350 basis points (bps) for loans up to Rs30 lakh and MRR minus 300 bps for loans greater than Rs30 lakh.
So, if the MRR is 15%, the applicable rates for a loan up to Rs30 lakh would be 11.5% and 12% for loans greater than Rs30 lakh. The maximum tenure of the loan is up to 25 years and the loan is in the market till 31 March.
Says an Axis Bank spokesperson: “There is no prepayment penalty for a customer who wants to foreclose the loan with funds from own sources. Even if the customer wants to switch the loan to another lender in the future, there won’t be any prepayment charges.” However, a processing fee of 1% of the sanctioned loan amount along with applicable taxes will be charged.
Just two month ago, the bank had launched a scheme where the interest rate was fixed at 8% for the first year, followed by a floating rate. This scheme closes on 31 January.
The Axis Bank’s new scheme is similar to those being offered by HDFC Ltdgiving a fixed rate of 8.25% till 31 March 2012 and making it floating, thereafter. In December, many banks, including ICICI Bank Ltd and IDBI Bank Ltd, had launched teaser rate home loan offers. As of now, 20 banks and three housing finance companies offer teaser loans.
Regulatory changes put MF agents in dock
It’s been a tough year for the Indian mutual fund (MF) industry. Thanks to the regulatory changes in 2009, such as the abolition of entry loads and the listing of funds on the stock exchanges, the income of existing distributors has dropped. As a result, many of them have switched to pushing other investment products that help generate better revenues compared with MFs.
Sale of equity MFs continues to decline. As of December-end, equity MFs saw subscription of units to the tune of Rs4,047 crore as against Rs8,737 in July. Note that entry loads were abolished on 1 August.
To make matters worse for agents, some MFs have already started issuing letters to distributors, stating that 16 January is the cut-off date to submit the know-your-client (KYC) and power of attorney (PoA) documents, keeping with the capital market regulator’s recent ruling. Some funds have stopped paying commission to agents till they comply with the ruling.
There seems to be a small respite though. Earlier, the impression was that agents were required to submit a copy of the KYC and PoA documents of all the investors to all the funds the investors had invested in. In future, agents may have to submit these documents only to the registrar, who, sources claim, could emerge as the record keeper of such documents.
--Kayezad E. Adajania