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

Business Daily from THE HINDU group of publications
Tuesday, Oct 21, 2008
Reserve Bank cuts repo rate to ease credit squeeze
Some banks such as Union Bank, Corporation Bank and Punjab National Bank have already lowered rates on new home and auto loans.
http://www.thehindubusinessline.com/2008/10/21/stories/[protected].htm

Indian Reserve Bank (RBI) cuts repo rate by 100 bps to 8%
by Bill Belew on October 20th, 2008
http://www.panasianbiz.com/2008/10/indian-reserve-bank-rbi-cuts-repo-rate-by-100...


On October 20, 2008, the Reserve Bank announced a reduction in the repo rate under the Liquidity Adjustment Facility (LAF) by 100 basis points from 9.0 to 8.0 per cent.
http://www.banknetindia.com/banking/measurenov08.htm


Reserve Bank of India Cuts Repo Rate
by: Equitymaster October 20, 2008
http://seekingalpha.com/article/100685-reserve-bank-of-india-cuts-repo-rate


Reserve Bank Reduces Repo Rate by 1 percent from 9 to 8 percent
• Author: admin
• Filed under: Bank, Interest Rates
• Date: Oct 20, 2008
Reserve Bank on a sudden move reduced the Repo rate today by 100 basis points or 1 percent from 9 to 8 percsnt .
http://www.rupya.com/archives/2008/10/20/reserve-bank-reduces-repo-rate-by-1-per...

TO WHOM IT MAY CONCERN

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 11.0% to 13.0%.

Recently, RBI has introduced lot of liquidity in the market by reducing CRR considerably. RBI has also reduced repo rate as per the above mentioned NEWS highlights on several websites, 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 yet. Our question is why?
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!!
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Aug 14, 2020
Complaint marked as Resolved 
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Comments

I also have the similar problem, i have takes loan from HSBC bakc arong 4 year ago at the 7.75% aftre the lot of ROI iteration from RBI it touches the upper limit 13.75%, Now probloem is this they peoples still are not ready to reduce the Home loan rate, There shold be an authority he suppose to review these kind of ir-regularity from the banks
i agree with you, i have same problem with HDFC. I think all these private banks have their own LAW over RBI rules and only people like us are always paying for it.

I don't understand why these banks are not reducing interest rates for existing customer and the interesting thing is that govt and RBI are also not taking any actions against these banks.

Thanks
Mayank Mishra
Hi,

Stop barrowing money from HDFC, ICICI & other private banks. They lend the money very easily and hence it is a trap. No wonder the above two banks have 50% of mortgage loans in India.

The definition of floating is very skewed with private banks. Since private finanacial institutes does not come under the purvue of the RBI, the customer is at their mercy. Ofcourse these private banks don't have a face. A private contractor comes to your office and we happily sign the papers praising how great their service is. In fact they are screwing you in all forms.

Best is move to Public sector banks at least their definition of floating is at-least attached to RBI even though the time lines of floating are not defined very clear.

Sri
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Yes even I too agree, My loan tenure is increased from 20 years to 44 years without even informing me.
Also there are no signs of ICICI reducing the interest rate. If they are short of funds then its better to switch the loan to some other bank.

Worst bank I have ever seen.

Regards

Vishal
Govt is also sleeping . May be ICICI bank gives huge donations to all the political parties.
Lets all o[censored]s form a Borrower's union and stop paying EMIs to ICICI bank.
I think the government must seriously look at the non revision of interst rates by Private banks.I dont understand they are different from private money lenders if such is their atitude.I have been a loyal customer of ICICI for the lat more thatn 12 yrs and I am paying thur my nose for my loyalty.

People will start losing faith in the banking system and the monitioring agencies.The government must stop all factilites to such banks such as lending money thru repo or accepting money thru reverse repo.
I took home loan last year at 11.75% from Deutsche Postbank (earlier BHW, even earlier Birla Home Finance) and despite lowering of RBI repo rate several times in recent months, Deutsche Postbank is not ready to lower the interest rate. Once you took a loan from these "money sharks" you are stuck in uninvited trouble for the life. Home loan laws are different in India than what is in US. In US maximum you lose if you stop paying the loan is your house. But here that is not the case. Here just "surrendering" the property is not going to be the end of the story. The bank will declare you broke and that after a painful legal procedure.
To Vivek, yes it sounds like a good idea to form a borrowers union and fight with the banks either to lower the interest rates or to stop paying the EMI altogether.

IS RBI Sleeping here?? Can't they take any actions on this issue? If not, do we need to modify existing terms & conditions under which private banks operate in India?? These issue needs to be politicized only then we can see some outcome.
I have the loan from ICICI bank and raised the questions and written to them as under. Even you can collect all the data that i have searched for and put in here such as the detailed discription of rate hike and reduction by RBI and comparision of the same with ICICI. We all need to come together and fight with ICICI.

letter details:
The problem with ICICI Bank Home Loan Finance has come at this time of recession, wherein RBI has aggressively come out with series of rate cuts (as evident from hereunder) followed by other banks to the interest rate varying anywhere between 9.0% to 9.5%. Unfortunately I still have the highest interest rate of 11% revised from 12.50% with effect from 10/03/2009.

Changes in Repo rate (%) by RBI is given as hereunder.

December 2006 repo rate was 7.25
December 2007 repo rate was at 7.75
Changes in the year 2008 as under:
June 2008 increase by 75bps to 8.50
July 2008 increase by 50bps to 9.00
Oct 2008 decrease by 1.00bps to 8.00
Nov 2008 decrease by 50bps to 7.50
Dec 2008 to decrease by 1.00bps to 6.50
Jan 2009 decrease by 1.00bps to 5.50
Mar 2009 decrease by 50bps to 5.00
2.75 in all


Changes in Reverse repo rate (%)

December 2006 reverse repo rate was 6.00
December 2007 reverse rapo rate was at 6.00
Changes in the year 2008 as under:
Dec 2008 decrease by 1.00bps to 5.00
Jan 2009 decrease by 1.00bps to 4.00
Mar 2009 decrease by 50bps to 3.50
2.50 in all

ISSUES WITH ICICI:

1. As evident from above, if I do the absolute comparison from the time when I had taken housing loan in December 2006 till date, there is an absolute reduction in the cost of funding. If I compare Repo, there is a reduction of 225bps and in case of Reverse repo, there is a reduction of 250bps. In December’06 I was charged interest of 9%floating when Repo rate is at 7.25% and reverse repo at 6%, so when at today’s date, Repo is at 5% and reverse repo is at 3.5%, why I am charged 2% extra from the initial rate of 9%? Not only that I am charged 2% additional, but I should be getting more cut if you compare with the cost of funding (repo/ reverse repo) as mentioned above. The cost of funds in absolute terms has decreased considerably as evident. You have charged hefty 13% interest on my housing loan considering above hikes as on December 2008. Which is highest compared to industry PEs. I have the argument that by December 2008, RBI had already given 250bps cut on repo rate. But no effect was passed by ICICI. why?

2. In the initial transit itself, interest rate is increased by 50bps in February 2007, another 100bps in April 2007, another 100bps in May 2007 which comes to 250bps by May 2007 itself whereas during that time there was no change in reverse repo, 50bps increase in repo rate to 7.75 and 100bps in CRR to 6.50. You have increased the rates at your own will even if funding cost has not changed much. How customers can be charged more when system is not allowing?! Is it so that since I have signed the agreement, I am bind to you and have given you the right to charge anything at your will? Or is it so that Bank thinks that customers will resist transferring the loan considering high transfer cost (2%+taxes). So customers will accept the small rises in interest rates every time done by you.
This requires explanation.

3. Reverse REPO/ REPO and CRR increase/ decrease has the same effect all across applying to all the banks. Hence the benefit of such rate cuts goes directly to the bank to be passed to customers as evident. Most of banks have given the benefit at due time. ICICI has not passed the pro rata benefit as evident from repayment schedule. The effect of first 50bps cut effective from January 2009 doesn’t excite at 13% interest rate.

Sir, kindly also note that since I didn’t hear considerable cuts from you, I inquired to ICICI bank borivali west branch and to my surprise they offered the scheme wherein rate cut will be revised to 11% from 12.50% provided I pay 50bps swich charges on the outstanding of my housing loan on that date. I never understood on what grounds and with what right I am imposed such charge? Rate cut is my right. And to avail my right why am I charged? The benefit which is given to banks by RBI is for passing it to customers or to charge more from them? But I had no option but to immediately go for it since I was told the offer was valid only till 31/01/2009 and it was mandatory to pay the charge to get the rate of 11%. I have attached the swich charges slip for the reference.

4. If ICICI business model is such that they can not afford to offer the benefit of rate cut to existing customer while considering other adjustments of banking business; it is absolutely injustice to me. And to rectify this injustice you should at least allow me to transfer my housing loan to some other bank at free of cost. At present I am charged hefty 2% plus taxes on my outstanding on the date of my transferring the a/c to some other bank. I understand such charges are imposed so that ICICI does not have to face injustice by customers. But what if ICICI does injustice to customers? It is absolutely unfair and intentionally malafide to take undue advantage of an existing customer who is absolutely loyal and have never defaulted or delayed any of the housing EMIs or other dues as evident from the repayment schedule.

RELIEF REQUIRED:

1. Reimbursement of the charges imposed on me to transfer the loan interest rate from 12.50% to 11%.
2. Logical refund of the excess interest of 2% charged to me till date of loan tenure.

AND

3. Allow me to transfer my Housing Loan to other bank at free of cost.

Government is considering giving the rate cut to encourage more towards spending and circulation of money to minimize the impact of recession on us. But ICICI is looking only your own advantage at this time too. It is evident that whenever RBI has hiked interest rates, ICICI have done it overnight, but now when RBI is cutting rates, they are not. ICICI Chiefs have often quoted that they need to wait and watch the effect of rate cuts before passing the benefit??

Such questions need explanation.

Kindly solve my grievances at the earliest to avoid further action.

Thanks,

neepa
[protected]
I think we must all contact Raj Thakare for this, because this is the only way left. give dharna in front of ICICI banks and force stop operation.this will sound louder and will be hear all over INDIA than wrting here on PC.thodi tod pod ho jaye.
I am also going through same pain

Only Solution is switch.

Bank of Baroda: 9 per cent - 9.75 per cent

Canara Bank: 9.25 per cent - 10 per cent

Bank of India, PNB: 10.25 per cent

Allahabad Bank: 10.50 per cent

SBI: 10.75 per cent

Indian Bank: 10.5 per cent - 11 per cent

Amongst these we have spoken to 5 banks which are willing to refinance home loans

Source : http://profit.ndtv.com/2009/01/16143637/Why-home-loan-rates-drop-slowl.html

ALLAHBAD BANK — change of interest rate in vehicle loan

Last year i have took loan from Allhabad bank for a car for the period of 84 months at the rate of intrest 9.50%, but after 11 months the rate og intrest changed to 11.25%. Can bank change the rate of intrest? i pay my EMI regularly.

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