[Resolved]  Home Loan — NOT REDUCING INTEREST RATES ON HOME LOAN FOR EXISTING CUSTOMERS

I had taken home loan from ICICI bank and I have an impeccable repayment track record for EMIs all the times.

I have taken a floating rate for my home loan. During the time of monetary tightening by RBI my rate shot up from 12.0% to 13.5%.

Recently, RBI has introduced lot of liquidity in the market by reducing CRR considerably. RBI has also reduced repo rate, which lowers cost of funds for the banks.

Due to these measures from RBI, many public sector banks have reduced home loan floating interest rates. But ICICI has not reduced home loan rates by 0.5%, but it increased 1.5% and reduced only 0.5%. When I contacted them they are offering 11 to 11.5 % rate of interest to new customers only. When RBI increases CRR or repo rate even by 50 basis points, all the banks increase the interest rates immediately. Likewise ICICI has increased its rate of interest home loan with effect from July 1, 2008 and further increased the same from October 1, 2008 even without informing us.

What is the meaning of floating rate then? It only goes up and seldom comes down. Also ICICI is giving new customers a very low rate compared to what I am paying. It most cases its around 3% lower than what I pay. How can this happen and why is RBI not doing anything about this? I am resigned to my fate and mistake by choosing ICICI.
I can't even switch because of pre-pay penalty. Rate goes up in a whisker but seldom comes down even when condition are favorable.

Why is ICICI not reducing the rates now?

This is not good ... we home loan customers are not getting our legitimate right of market based floating interest rates irrespective of being a best payer as well as a pretty business giver to ICICI. We are remarkably disappointed by this leisurely approach of ICICI with its customers like us. In the present circumstances nothing stops us as consumers to think for taking proactive steps and to shift our business to a competitor bank by switching over the existing home loans.

ICICI have a very strange policy to reward its loyal customers with higher rate of interest and to attract new customers with lower interest. Can they explain why they have this policy or they are taking an illegitimate advantage of their loyal customers?

By any logic it cannot be justified?

We humbly request to the monitoring authorities to take a rational & reasonable action against the aforesaid matter.

Something has to be done and I appeal to the readers to stay away from ICICI. Don't make the mistake of going to a pvt lender like ICICI because the mantra is simple.

Thanks with best regards!!