No Reduced Risk Weightage Benefits for Home Loan Borrowers

April 25, 2007	(Be the first to rate this story!)  Loading ...
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The Reserve Bank of India (RBI) has brought a drop in risk weightage on residential housing loans up to Rs. 20 lakh to 50 per cent from the existing 75 per cent.

Since the bankers seem perplexed regarding passing the benefits of lower risk weightage to consumers, there are no signs of relief for home loan borrower.

However, they can expect to avail some of the benefits if not all, says Vishakha Mulye, group, chief financial officer, ICICI Bank.

He further sheds light on the concept of risk weight saying that it is a significant component of return on equity. Lending rates are a function of cost of funds and return on equity. The reduction in the risk weight will certainly help to save on capital to a great extent, thereby bringing benefits for the entire banking system.

Now, it is banks’ turn to take individual decisions. Of late, the hike on the interest rates was substantial. But the consumers were not passed the entire cost. For that reason, some modifications have been done before taking a final decision, explains Sangeet Shukla, chief general manager, personal banking, State Bank of India.

Then comes the perspective of Union Bank of India which claims of not having exceeded the interest rates on loans up to 20 lakh. This is why; they see no case for any further reduction in rates.

News Published Under:   Home Loans |

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