The floating rate is linked to an external benchmark and will be independent of the loan amount or duration.
Bank of Baroda, Union Bank of India and Syndicate Bank have started differentiating their retail loan offerings to customers based on their credit score slabs obtained from the Credit Information Bureau India (CIBIL), according to an Economic Times report.
The first step of segregating retail loans into their own versions of prime and sub-prime risk exposure has been done to increase transparency, it added.
Bank of Baroda will use three credit score slabs from CIBIL to offer three home loan versions, wherein customers with a credit score above 760(out of 900) would pay interest 8.1 percent interest on new loans.
In comparison to those in the lowest 675-724 range would pay 9.1 percent and those in the middle range of 725-759 will pay 8.35 percent.
The floating rate is linked to an external benchmark and will be independent of the loan amount or duration. This means if the customer's credit score improves during the duration of the repayment, the interest rate would be lowered accordingly, and vice versa.The new policy has been adopted since October 1.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.