ICICI Bank discontinues teaser rates

ICICI Bank discontinues teaser rates

New Delhi: The country’s largest private lender ICICI Bank on Wednesday said it has discontinued the teaser rate schemes which entail cheaper home loans to new borrowers, with immediate effect.

ICICI Bank has withdrawn the teaser rates on home loans with immediate effect, an ICICI Bank spokesperson said.

Teaser rate is a special loan scheme under which a concessional rate is offered for a limited period to attract customers.

It may be recalled that in its policy review meeting last month, the RBI had voiced concern over the high risk of default on loans offered at teaser rates and had tightened the noose around this product.

ICICI has become the first major lender to withdraw teaser home loan schemes, which was introduced by the banks to attract property buyers.

The bank had in October said that under the teaser rate scheme, home loan seekers had to pay 8.5% in the first year, 9.25% in the second year and 1.5% over and above the base rate in the third year.

The base rate is the benchmark rate below which banks are not allowed to fix their lending rates.

ICICI Bank has fixed its base rate at 7.75%. A few months ago, the RBI had asked lenders to do away with teaser rates on loans entirely.

However, many of the banks did not comply with the recommendation, arguing that loan offtake would be impacted adversely.