Banks do not pass on rate cuts
New Delhi: Despite many banks have cut their prime lending rates (PLR) recently, existing customers have not benefited from the move. Even after one month of the rate cut, a majority of home loan borrowers under floating rate schemes found out that banks including SBI, PNB, IDBI Bank, have not passed on the rate cut to them. Banks offered this benefit only to new customers.
A Delhi-based borrower, who has taken a home loan from a PSU bank, said though the bank has cut PLR by 0.75 percentage points, his rate is unchanged at 11.5%. He borrowed the money a couple of years back at 8.5%. When interest rates were increased, banks promptly raised the rate. ‘‘But, now as the rate has gone down, the bank has not cut it,'' he said.
And these banks do not even inform about hiking rates. When rates go up, they just increase the tenure, keeping the EMI
unchanged. This saves them from the trouble of taking new cheques for the increased amount at higher rates. A senior IT professional Puja Sinha, who had taken a 20-year home loan at 8.5%, said that her tenure has been increased to 23.5 years by August 2008 despite the fact that she had paid the EMI for last two years regularly.
Interestingly, when she approached the bank to cut her interest rate following the reduction in PLR, a bank official said that for this she needs to give an application. However, when the interest rate increased, bank hiked the rate on its own without informing her.
However, banks officials denied. SBI GM Nanda Kumaran said once they cut the PLR, they reduce the floating loan rate through a centralised system. Similarly, IDBI Bank chief credit manager R K Bansal added that it passes on the benefit of the rate cut immediately to the customers.
A senior manager of a private sector company said that he was kept in dark over the repayment conditions of the home loan he had taken around three years back from a public sector bank. He further specifies that the bank doesn’t communicate with him about the interest rate and outstanding amount left.
TOI: 16/12/2008
A Delhi-based borrower, who has taken a home loan from a PSU bank, said though the bank has cut PLR by 0.75 percentage points, his rate is unchanged at 11.5%. He borrowed the money a couple of years back at 8.5%. When interest rates were increased, banks promptly raised the rate. ‘‘But, now as the rate has gone down, the bank has not cut it,'' he said.
And these banks do not even inform about hiking rates. When rates go up, they just increase the tenure, keeping the EMI
unchanged. This saves them from the trouble of taking new cheques for the increased amount at higher rates. A senior IT professional Puja Sinha, who had taken a 20-year home loan at 8.5%, said that her tenure has been increased to 23.5 years by August 2008 despite the fact that she had paid the EMI for last two years regularly.
Interestingly, when she approached the bank to cut her interest rate following the reduction in PLR, a bank official said that for this she needs to give an application. However, when the interest rate increased, bank hiked the rate on its own without informing her.
However, banks officials denied. SBI GM Nanda Kumaran said once they cut the PLR, they reduce the floating loan rate through a centralised system. Similarly, IDBI Bank chief credit manager R K Bansal added that it passes on the benefit of the rate cut immediately to the customers.
A senior manager of a private sector company said that he was kept in dark over the repayment conditions of the home loan he had taken around three years back from a public sector bank. He further specifies that the bank doesn’t communicate with him about the interest rate and outstanding amount left.
TOI: 16/12/2008