[sbinews] Beware of floating rate loans
- From: sbistcbangalore@xxxxxxxx
- To: sbinews@xxxxxxxxxxxxx
- Date: Mon, 22 Dec 2003 20:55:17 +0500
Beware of floating rate loans
PUJA MEHRA & JAMES MATHEW
TIMES NEWS NETWORK[ THURSDAY, DECEMBER 18, 2003 05:41:53 AM ]
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NEW DELHI: Banks are turning out to be savvier than what the RBI thinks. The
central bank may have cautioned banks against reckless marketing of cheap home
and car loans, but banks have already started passing on the entire interest
rate risk to consumers.
Consumers flocking to banks for borrowing at cheap interest rates, are ending
up availing loans for their dream houses and sleek cars, not at the rock-bottom
rates being advertised aggressively but instead at floating rates. (Would you
prefer to take a car / home loan at floating rates?)
These rates are linked to the prevalent market rates over the loan repayment
horizon.
Sources said of late banks are convincing majority of the consumers to opt for
floating interest rates for loans, making them to bear the brunt of any upward
revision in lending rates in future.
While nearly 40-50 per cent of the home and car loan portfolio being dispensed
now are at floating rates, in case of some of the private sector banks this is
as high as 90 per cent.
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