Banks increase in roi home loans overdues & npa
T V RAAO
(Querist) 17 February 2012
This query is : Resolved
SIR,
There has been unusual changes in the ROI on home loans. The home loans are normally sanctioned on EMI repayment.
The upward increase in ROI by banks has resulted in increased amount repayment demand . Since most of the cases the repayment is made by standing instruction, the borrowers would not be knowing that there is increase in repayment demand on account of changes in ROI. All banks including private banks have not bothered to sensitize the home loan account borrowers about this unimaginable burden volatality. Not only banks but the regulatory authorities who cry horse about NPAs are very casual about this issue. Once the account turned NPA for the ROI reason the credit rating of the borrower is damaged beyond repair.
Even though the GOI has recently provided for provision of bullet payment of overdues overflow on account of ROI, no bank has taken initiative to popularization the option, to save the credit rating of the borrower.
The interest overdue-overflow may not last longing as interest rates may also go down, giving relief in the future years to the borrowers.
In order to save the banking industry and the home loan borrowers, the banks may take up with the regulatory authorities:
1) For provision of resetting the debt once in four years, to factor the interest rate volatility.
2) this resetting is not amount of re-phasing but systemic adjustment of mismatch.
3)At least the resetting be given for HL up to Rs.25 lacs (PSD)
4) This resetting is done at bank level and not branch level, with out any application/action from the borrower side.
5) necessary legal sanctions for resetting the liability.
6)to recognize re-phasing and re-setting as separate mechanisms for credit management
The action of Banks/IBA/BCSBI thus is for saving the regularly repaying borrowers, for classifying as NPA.
ajay sethi
(Expert) 17 February 2012
Mr rao this is not a legal query for experts to answer
