RBI NOT AMUSED ABOUT HOME LOAN TEASER RATES

India’s banking regulator, the Reserve Bank of India (RBI), has expressed concern about banks offering home loans with teaser rates – schemes where monthly installments rise after the initial years. The central bank’s worries stem mainly from the fear that borrowers may find it tough to repay loans once interest rates go up after the first couple of years when the rates are fixed. According to RBI, banks shall ensure that borrowers are well aware of the implications of such rates and the appraisal takes into account the repaying capacity of borrowers when the rates become normal.