about loan process

8/3/2019 About Loan process

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Hi,

I have taken Home & top-up loan from ICICI bank with floating ROI.

RBI reduced the Repo rate & so nationalized banks also reduced the FRR/PLR (SBI's home loan interest

rate 8% to 8.5%).

But private banks like ICICI are not reducing it proportionately (for me currently ICICI's Home loan

Interest rate is 13%, for top-up it is 14.75% & FRR/PLR is

13.75%). But while increasing FRR / PLR, they are always ahead of nationalized banks.

Four-Five yrs before, when I approached the ICICI bank for home loan, Interest rate of ICICI (In May

2004, FRR/PLR of ICICI was 7.75% & with -0.75% variance with FRR/PLR, I got the loan at 7.00% ROI) &

Nationalized bank was almost same (Nationalised banks were charging around 7.50% interest rate). Now

the difference between ROI in Nationalized banks & ICICI is around 5% (13% - 8%). [The effect of the

difference in ROI of Home Loans between nationalized & ICICI bank for Rs. 10,00,000/- loan & the tenure

of 20 yrs is Rs. 3,500/- per month .]

Currently, Bank rates of ICICI bank are different, for new / existing customers. So without reducing

FRR/PLR, they are reducing interest rate for new customers (just to attract new customers) by giving

more variance in FRR/PLR with ROI. So they are charging ROI of 13% for existing customers & around

9.75 for new customers. Not sure, whether this is cheating of existing customers as per consumer laws /

RBI regulations.

I taken floating interest rate option, under the impression that "Floating Interest Rate" means the

FRR/PLR is directly proportional with the RBI Repo rate. ICICI, increases the FRR/PLR, immediately after

increase in REPO, but while reducing they are reluctant (just to fill their pockets with the difference

between FRR/PLR & Repo). Then what is meaning of "Floating Interest Rate"? I think, it's cheating with

the customers.

We, as a consumer, understand, if there is -

* minor dis-proportion of FRR/PLR of banks with RBI Repo Rate and

* minor difference of Interest rates in Nationalized & Private bank.

But when there is huge difference, we, as a consumer or as a common man, become helpless. We feel

that private banks like ICICI are cheating us. And when there is recession and people have fear of job

loss this is very frustrating.

Transfer of loans to some other bank is one solution on this problem, but an expensive one. For transfer,

ICICI will charge 2% on the outstanding principle, plus applicable service tax @12.36% on the foreclosure


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charges. Then processing fees (0.5%) of the new bank is new burdon, though which is acceptable. Since

loan transfer is Prepayment of the loan (by taking loan from other bank). Not only for loan transfer but

even for Prepayment, ICICI charge 2% on outstanding Amount. Not sure, whether charges on Full

Payment / Prepayment has any legal ground, because as per my knowledge, SBI is not chanring anything

for Pre-payment (But I am not sure).

In this way, ICICI has blocked all the roads of customers (loan transfer is expensive, staying with ICICI is

also expensive).

Note: Last week, ICICI came up with scheme for existing customers to reduce the interest rate (making

variance with FRR/PLR to 4%) by paying 0.5% of outstanding amount & some other fees. By this scheme

now status of existing customer for home loan will be changed to new customer & he will get new home

loan account number. So bank is treating existing customer as a new customer, by charging some

amount. Just to reduce EMI burdon of my home loan- though unwillingly- I opted for it, which may get

effect in next month. But scheme is not for top-up loan. So still having very high ROI for top-up loan.

Though I am not happy, in paying for such Home-Loan scheme, to reduce the ROI; since RBI reduced the

Repo and ICICI is supposed to transfer that benefit to existing customer (having floating rate option)-

without delay & without such extra payment schemes (where existing customers will be converted to

new customer).

RBI / Central Government are the governing bodies, but they may not have any control on this.

As a common man, confused with the situation. Don't know who can help us. There is always hope from

Consumer Court, but not sure, if this issue can be discussed in consumer court.

I have taken insurance on my both the loans from ICICI for security purpose. Even I don't know now my

new customer status in case of Home Loan, will nullify the insurance coverage for my home loan.

I know this is not the personal problem but for all ICICI customers. But any solution on this?

base 10.75%

Baroda Home Loan to Individuals / NRIs / PIOs (W.E.F 01.08.2011)

Fixed Rate option Not Available

Floating Rate option

Repayment Period Up to Rs. 30 Lacs Above Rs. 30 Lacs 75 Lacs and above


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and below Rs. 75

Lacs

Upto 5 years0.50% above BaseRate

1.25% above BaseRate

Base Rate + 1.50%

Over 5 years & up to15 years



Base Rate +1.75%

Over 15 years & up to

25 yrs

1.00% above Base

Rate

1.75% above Base

RateBase Rate +2.00%

Concession of 0.25 % in interest rate available upto 31.12.2011 during Retail Loan FestivalCampaign on Home Loan

=10.75+.75-.25 =11.25

AXIS BANK SUPER RATE OF INTEREST 11.75%

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