SBI to withdraw teaser home loan schemes: Chairman

State Bank of India, the country's top lender, has decided to withdraw its special home loan schemes from May 1, in response to the concerns raised by the Reserve Bank of India (RBI), its chairman said on Wednesday.    

The special schemes, also known as teaser loans, are housing and auto loans that banks offer to borrowers at lower interest rates in the initial years. These schemes had come under the RBI's scanner due to worries that they could significantly raise banks' bad loans.
                                          
"State Bank of India will now link its home and auto loans to its benchmark base lending rate," SBI's new chairman Pratip Chaudhuri told reporters. The withdrawal of special schemes would not impact the bank's loan demand, he said.           

SBI holds 18% share of the home loan market. Indian banks had launched the special home loan schemes following the global economic downturn, to boost loan demand in Asia's third-largest economy.                                           

Rival ICICI Bank and mortgage lender Housing Development Finance Corporation had withdrawn similar schemes in December.