ICICI Bank Terminates Special Mortgage Offer    
Industry News

By : Tony Chua, Asian Banking & Finance

India's central bank is discouraging "teaser loans" due to a higher risk of delinquencies.

ICICI Bank Ltd. on Wednesday withdrew a special mortgage that offered lower interest rates for the first two years of the loan, a bank spokesman said.

The country's largest lender by assets had started the offer in early November. Under the terms, borrowers paid 8.5% interest in the first year, 9.25% in the second year and then the applicable floating rate.

The spokesman didn't give any reason for withdrawing the offer.

India's central bank has been trying to discourage what it calls "teaser loans" due to a higher risk of delinquencies as interest rates rise after initial years of the loan term.

At its monetary policy review last month, the Reserve Bank of India raised the standard asset provisioning for such products to 2% from 0.4% to make these loans costlier for lenders.

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