State Bank of India (SBI) – the country’s largest lender and the pioneer of teaser loans in the country – has requested the Reserve Bank of India (RBI) to waive the higher provisioning requirement for these loans. RBI had mandated higher provisioning for teaser loans — which offered lower rates in the initial years and higher in the subsequent ones. The standard asset provisioning requirement for such loans is two per cent, as against 0.4 per cent for any other loan. As a result, SBI, which has a portfolio of nearly Rs 32,000 crore of teaser loans, would have to make an additional provisioning of nearly Rs 400 crore. After the RBI move, SBI tweaked its home and auto loan schemes from January 1. Instead of a fixed interest rate, it started offering a fixed discount. However, it did away with the fixed rate. The interest now changes with the base rate.
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