Consumer forum orders ICICI Bank to pay a penalty of Rs 1 lakh to the borrower and charge the same rate of interest to old and new home loans

After hearing the pleas, the forum held that the interest rate of any old loanee would be lowered to bring it at par with the interest rate at which the loan is advanced by the bank to its new customers

(Thanks Abhijeet for the link!) Deciding a complaint filed by Panchkula resident Birbhan Goyal, the consumer forum held on Tuesday that enhancement in the rate of interest in case of home loan is illegal and unwarranted.

Imposing a penalty of Rs one lakh, which the bank will pay to Goyal, the forum said, ‘The bank is directed to overhaul accounts of all its loanees and bring the rate of interest at par with those at which the loan (home) is advanced to new customers from time to time, so that all its customers, whether old or new, who have opted for adjustable rate of interest pay the same rate of interest during any particular period.’

Stating that the finance company and the bank adopted unfair trade practice, the forum, headed by Jagroop Singh Mahal, held, ‘Whenever enhancement takes place, the rate would not be more than that at which loans are being advanced to new customers, meaning thereby that if after enhancement, loan is advanced to any new customer at a lower rate, the rate of interest of the complainant and all other loanees would also come down to the same level.’
To read more, please, visit - The Times of India

Related Story:

A bank cannot offer differential rates for old and new customers if both have floating interest rate - RBI Deputy governor

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ICICI Bank cuts interest rates only for new home loans

No interest rate cut for the existing customers!

New floating rate structure

1) Home loans less than Rs 20 lakhs:
New interest rate 9.75% as against 10% earlier

2) Between Rs 20-30 lakhs:
New rate 10% as against 10.5% earlier

3) Rs 30 lakhs and above:
11.5% as against 12% earlier.


To read about Canara Bank's offer, please, visit - The Economic Times

ICICI slashes home loan rate

The largest home loan lender ICICI Bank has given a New Year gift to its borrowers. The bank has cut its home loan rate by half a percentage points to 11% for loan up to Rs 20 lakh and to 12.50% for loan more than Rs 20 lakh.

Despite the cut in the rate, the home loan offered by the bank will be costlier than its rival HDFC Ltd and other public sector banks.

The bank on Wednesday has cut its floating reference rate by 50 basis points to 13.75% from 14.25%. The bank has also cut its deposits rates by up to 75 basis points. In August 2008, the bank had increased its home loan rates by one percentage point. This is the first time the bank has responded to the liquidity infusion by RBI in last three months.

Public sector banks like State Bank of India, Punjab National Bank, Union Bank of India and others have already cut their lending rates by up to 150 basis points since RBI infused liquidity in the financial system. The home loan rates offered by large government-owned banks like SBI, PNB, UBI and Bank of Baroda vary between 9.5% and 11%.

HDFC Ltd, the second largest player in home loan market, has also cut its rate by half a percentage point to 10.25% for loan up to Rs 20 lakh and 11.25% for loan more than Rs 20 lakh. In fact, HDFC Ltd had not increased its rates as sharply as ICICI Bank when RBI had tightened the liquidity in the system during initial months of 2008. That is why, HDFC's home loan product is cheaper than that of ICICI Bank.

The rate cut will benefit the existing customers too as it will be passed on to them also. It will reduce the EMI of a 20-year loan by Rs 35 per lakh to Rs 1,136. That means, on a Rs 50 lakh loan for 20 years, the EMI will come down by 3% or Rs 1,772 to Rs 56,807. But, if somebody wants to continue to pay the same EMI and reduce the tenure of the loan repayment, the fall in the interest rate by half a percentage points from 13% to 12.5% will lead to reduction in the period by 28 months.

But as the bank has kept its home loan rates higher than the other banks, clearly suggests that it would not like to be very aggressive in the home loan segment. Till early 2007, ICICI Bank used to offer home loan at one of the lowest rates. But, later on it changed its focus as the liquidity situation tightened in the money market.

The bank has also cut its prime lending rates the benchmark rates for the corporate loan by half a percentage points to 16.75%.
The Times of India

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Now is the right time to work on reducing interest rates - K V Kamath, ICICI Bank

Existing and new ICICI Bank customers to get their new year gift in the form of a cut in interest rates

Forecasting that inflation is inching towards zero, ICICI Bank Managing Director and CEO K V Kamath on Tuesday suggested to the Reserve Bank to further cut key policy rates by 100 basis points as part of a calibrated move to usher in a low interest rate regime.

"I think just now let us start by cutting them (repo and reverse repo rates) by 1 per cent or so, and see what happens," he told when asked for what his advise would be for RBI to reverse the economic slowdown.

Kamath, who is also the President of the Confederation of Indian Industry, said, "It would be in everybody's interest to work interest rates down. Inflation clearly talked of being near zero. I think it is the right time to work on this front (reducing interest rates) now.

ICICI home loan interest rates:

As for the ICICI Bank customers, Kamath promised, they would get their new year gift in the form of a cut in interest rates.

"We are looking at cutting interest rates very early in January for our housing and other loan customers," he said.

The extent of the rate cut is being calibrated and would be announced soon, he said when asked if the rate could be more than 100 basis points.

ICICI had earlier this month reduced home loan rates for new customers by up to 1.5 per centage point. There are indications that the fresh cut in interest rates would benefit both existing and new customers.
To read more, please, visit - Cut key rates by 100 bps; usher in low-interest regime: Kamath

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1) India may see deflation 2009: Bankers

2) Another round of home loan package to make purchase of a house within the reach of middle class end users?

ICICI Bank and HDFC appeared favorably inclined to cut their rates!

Leading private lenders, including ICICI Bank and HDFC, appeared favourably inclined to cut their rates, with sources saying the two lenders would study the PSU banks’ package before taking a call.

The sources said any decision would be taken after ascertaining whether PSU banks are getting any government subsidy for implementing the package.
To read more, please, visit - PSU banks cut rates on home loans up to Rs20 lakh - livemint.com

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