The Reserve Bank of India has always been concerned about the teaser home loan schemes offered by the lenders where the interest rate remains fixed for first few years and then it goes floating. The largest lender in the country State Bank of India used to offer such a loan scheme but it was withdrawn when RBI pressurized it to do so.
The major concern of RBI is the rise in the defaults in repayment once the interest rate shifts to floating interest rate scheme. Aware about the criticism from the umbrella banking body, the largest private sector bank in the country launched two home loan schemes that with both fixed and floating interest rate elements.
There is no such ban on teaser loan schemes but concerned about the side-effects of such schemes, the Governor of RBI has alluded that actions may be taken against tease loan schemes, is they continue to be a matter of concern.
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