In an interview to CNBC-TV18, VR Iyer, CMD, Bank of Indian spoke about home loan and rate of interest.
In an interview to CNBC-TV18, VR Iyer, CMD, Bank of India spoke about RBI's directive to banks asking them to discontinue the 80:20 housing schemes.
Below is an edited transcript of the interview.
Q: Does Bank of India has this kind of schemes?
A: No, we do not encourage this type of schemes.
Q: Do you have even one of them. You may not encourage but you may have them because builders are offering them everywhere?
A: I do not whether earlier the schemes were there in place. I need to check up on that.
Q: Is there a flip problem that when this is withdrawn some builders could default? Do you fear a marginal increase in real estate defaults?
A: The builders should not default. Actually, these types of loans are given to well-established players in the market. It is not given to all the real estate developers. The well-established and who have a proven track record then these types are loans are encouraged in the banking industry.
Q: Has there been reportage of wrong utilisation of funds by the builders with regards to this scheme?
A: No, there has been no report. Of course, I need to check with the banking industry phenomena and I do not have enough data to comment on this.
Q: How much of these loans have you seen the past two years, for example out of the entire property segment that maybe a bank has, how much of the loans comprised of such an 80:20 scheme?
A: I need to go back to the database and I have to work out on that.
Q: Now it looks like interest rates are going to stay on where they are for a goodish bit. When are you hiking base rates?
A: We have hiked the rate of interest on advances from September 2 but we have not increased any rate of interest on the deposit side because as of now we are still comfortable with but we will look into it sooner.