Easier credit option for home loan customers likely: RBI

In a bid to ease the penalty issue of customers by delaying transfer of loans from one to the other, the apex bank may do away with processing fee for shifting within the same bank from one type to another and an industry benchmark base rate for borrowers are among the recommendations of a central bank panel on pricing of loans to make processes smoother for retail borrowers.

A Reserve Bank of India (RBI) panel has recommended a new benchmark for floating rate loans for banks to give borrowers a better estimate of their credit cost.

A working group on pricing of credit has made several other key proposals too faster transfer of home loans, facility to reset interest rates without getting caught up with when banks change their Base Rates and no extra charges on customers who shift from BPLR linked loans to Base Rate.

The report of the panel when implemented would make loans cheaper for bank customers. The panel was headed by RBI deputy governor Anand Sinha.

“This may result in more transparency in pricing, reduced customer complaints and better transmission of changes in the policy rate,” it has said.

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If banks use weighted average cost of funds because of their deposits profile or any other methodology that may result in differentiation between old and new customers, the boards of banks should ensure that this differentiation does not lead to any discrimination amongst borrowers, the panel said.

“Indian Banks’ Association should evolve a set of guidelines for easier and quicker transfer of loans, particularly mortgage/housing loans,” said a report submitted by a panel headed by former deputy governor Anand Sinha. “There could also be penalties for banks which do not cooperate with borrowers in this regard.” Banks will also have to give their customers the choice of prepaying and exiting a loan, if the recommendations of this committee are implemented.